BANGKOK, 21 October 2014 Private businesses could soon be invited to partake in a new scheme by the government that aims to address the problem of loan sharks by having the non-bank companies issue ‘nano-finance’ loans to low-income earners with an interest rate between 32 and 36 percent per year.
Finance Minister Sommai Phasee said after a meeting with high-level ministry executives on Monday that the Bank of Thailand has concurred with the plan to allow private firms to issue the ‘nano-financing’ loans that would address the loan sharks problem more effectively than the current micro-finance loans provided by banks. The providers of the loans will have to be either juristic persons or companies that were financially ready and which must be registered with the Ministry of Finance. The amount of each loan will not be in excess of 120,000 baht, and there interest rate will be between 30 and 36 percent per year.
To provide private businesses with the incentive to partake in the scheme, only half of the income generated from the interest received from the loans will be taxable.
Mr. Sommai was confident the new scheme would not raise the household debts level, currently standing at 83%, because the Finance Ministry will lay down clear frameworks to regulate the issuance of the loans.