Maximum rate for microfinance at 36%

Maximum rate for microfinance at 36%

The Finance Ministry has capped the annual rate microfinance lenders can charge at 36% and will require lenders to have minimum capital of 10 million baht.

Somchai Sujjapongse, director-general of the Fiscal Policy Office, said the ministry expects to allow interested parties to apply for community-based microfinance operating licences from early next year.

The licences are meant to attract new players so that low-income earners can borrow conveniently from official sources instead of turning to loan sharks.

Given that microfinance is typically a high-risk endeavour, the ministry has set the annual lending rate far higher than for regular banks, said Mr Somchai.

The Bank of Thailand is drafting regulations based on Declaration of the Revolutionary Council No.58 that would allow microfinance loans to carry annual rates higher than 15%.

At present, 15% is the maximum annual interest rate allowed under the Civil and Commercial Code.

Mr Somchai said microfinance borrowers will be eligible to secure loans of up to 100,000 baht, while microfinance lenders will not be entitled to accept deposits from the public.

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