SCB pioneers pay cheque advance scheme
Move aims to tackle loan shark problem
Siam Commercial Bank (SCB) has emerged as the country's first lender allowing its payroll clients to withdraw salary in advance through its mobile banking platform.
The bank's payroll customers can withdraw money from their pay cheque before payday rolls around via the MeTang feature available from SCB Easy, for up to 50% of their salary but not exceeding 20,000 baht, said Orapong Thien-Ngern, co-president of the bank.
Borrowers can only withdraw money they have already earned. For example, they can withdraw 3,333 baht from their pay cheque if they work five days and their monthly salary is 20,000 baht.
The bank charges 20 baht for every 1,000 baht withdrawn using the pay cheque advance, and such fees are automatically paid from the employee's next salary.
MeTang helps employees get through financial emergencies without accessing loan sharks, in line with the Bank of Thailand's responsible lending guidelines, Mr Orapong said.
The pay cheque advance is part of SCB's payroll solutions package, benefiting both corporate customers and employees with financial management.
In the initial stage, the MeTang service is offered exclusively to employees of Villa Market JP Co and Ampol Food Processing Co. The bank needs to study their financial behaviour before expanding the service.
The monthly salary of the target group averages less than 15,000 baht.
"Loan sharks charge excessive interest rates, so this programme may tackle the country's household debt problem," Mr Orapong said.
SCB, the country's largest lender by assets, wants the new service to increase deposit account numbers of payroll employees by 20% this year.
The bank has about 2 million deposit accounts for payroll customers. It also targets 20% growth in deposit accounts for payroll customers next year.
An SCB survey found that 80% of respondents with salaries below 30,000 baht per month have used loan sharks. Some 88% of employees with a monthly income below 30,000 baht have debt of less than 15,000 baht.
Moreover, 57% acknowledged that debt concerns affected their productivity.
The survey outcome is in line with several studies on pay cheque advances in the US. The research found that such schemes helped boost employees' motivation and engagement and reduced turnover by 28%, which could save recruitment costs.
Mr Orapong said SCB informed the Bank of Thailand about the MeTang launch.
SCB also offers financial welfare packages covering employees' needs, including deposits, loans, life insurance and credit cards, with special interest rates and exclusive promotions.