Hire-purchase businesses are expected to come under pressure from a rising interest rate outlook and clampdowns on non-banking firms offering unregulated financial services, analysts say.
The non-bank bill is set to become an impediment for newcomers and existing business operators, which are both required to seek an operating licence from the Bank of Thailand, Asia Plus Securities analyst Usanee Lewrat said.
Despite market expectations that new car sales will recover to a five-year high in 2018, the bill is expected to curb loans which use auto registration as collateral.
Ms Usanee said effects from the non-bank bill will cover revenue generated from interest and fee income.
Interest rates imposed on hire purchase loans will be restricted to a maximum limit and fee collection will also be limited, she said.
Although Srisawad Corporation Plc and Muangthai Capital Plc can make an adjustment by adjusting their loan agreements, there are still uncertainties which the market should keep an eye on, she added.
Besides the double whammy of tighter regulations and rising interest rates, non-banking businesses could also face an adverse effect from International Financial Reporting Standard 9, according to Asia Plus Securities.
The bill has already passed the public hearing process, during which no-one disagreed with the principles and reasoning behind the bill. It is aimed at regulating non-banking firms that provide unregulated financial services, including operators of auto refinancing, hire purchase, leasing and factoring.
Under the law, an autonomous body will be set up to regulate financial institutions not supervised by the central bank, in order to protect consumers.
The central bank supervises banks and non-bank financial institutions that are bank subsidiaries.
Pornthep Jubandhu, senior vice-president for investment strategy at SCB Securities (SCBS), said the brokerage does not have a bullish view on non-bank and hire purchase businesses as the central bank is set to regulate them on the back of concerns over increasing debt burdens among low-income people.
"We see this from an SCB Economic Intelligence Center study which outlines increasing personal debt among the low-income, while there has been a decline in debt for middle to higher-income people," said Mr Pornthep.