The impact from the Bank of Thailand's amended title loan regulation is expected to be minimal on the industry's lending growth, says Ngern Tid Lor (NTL) Co Ltd, a leading player in the business.
Small title loan operators, particularly those in provincial areas, would need to standardise their business operations to comply with the amended regulation, affecting their loan expansion, but the impact should be limited, said NTL managing director Piyasak Ukritnukun.
According to the new regulation, effective from earlier this year, all auto title lenders must hold either picofinance or personal loan licences, which will determine the area of operations, interest rates and loan amount. The amended regulation is aimed at better protecting consumers, as picofinance and personal loans are now under the central bank's supervision.
Those operating under picofinance licences are regulated by the Finance Ministry's Fiscal Policy Office, and they can run businesses in specific provinces. To qualify for a licence, they are required to have registered capital of at least 5 million baht and they are limited to extending loans of up to 50,000 baht per borrower. Lenders can charge a maximum rate of 36%.
Those with personal loan licences will be governed by the Bank of Thailand. They can operate in any province, but they are required to have minimum registered capital of 50 million baht and they are prohibited from charging more than 28% interest.
NTL set a loan growth target of 35 billion baht or 6.28% for this year, with its total portfolio reaching 46.5 billion.
The company also aims for a 25% increase in new customers to 560,000 accounts in 2019.
Underbanked customers, those who can access deposit products but are struggling to access lending services, are the company's focus.
The market largely consists of low-income earners with up to 10,000 baht in monthly income.
"With a clear business operation under a personal loan licence, the company will not feel any impact from the amended regulation," Mr Piyasak said.
Despite a strong loan growth target, the company expects to keep a lid on non-performing loans at a low level of 1.3% this year, up slightly from 1.1% at the end of last year.
Car and pickup truck loans dominated 64% of total loans with 39.7 billion baht at the end of 2018, followed by trucks, tractors and buses at 26% and motorcycles for the remaining 10%.