Helping The Poor

[marshbags]

HELPING THE POOR

Police target violent money lenders

After searching a house and a condominium in Chon Buri’s Muang district, undercover police interview five debt collectors, who work for a Chanthaburibased loan shark who charges people at 60 per cent interest per month, or 2 per cent per day. Police got s

Four held amid doubts over govt plan to buy out debts from loan sharks Under a new government project to settle "offsystem" debts between lowincome earners and loan sharks, police are making arrests of those with potentials to use violence against their clients when they fail to repay.

In Chon Buri, four people were yesterday arrested for giving loans at the extremely high interest rates of 60 per cent a month. They admitted to the crimes and implicated a man identified as Damnern Srithongkham, as the leader of their loan service.

The suspects have been charged with demanding illegallyhigh rate of interests and operating a loan service without permission. They are Chakhrit and Komes Sanohsab, Arthit Pluemphol and Phithak Khuedee.

Meanwhile, some debtors are sceptical about the ambitious project to settle the "offsystem" debts, saying they doubt if money will ever reach them or if the state would fund such an ambitious project.

An ageing security guard, who identified himself only as Surachai, said he borrowed money from a loanshark because he lacked documents and collateral to qualify to for a bank loan.

He said the move would be a blessing for poor people like him and many of his friends, but he doubted the government's sincerity and ability to raise a huge amount of money to fund such a project.

The project was inaugurated yesterday, before moves to register people around the country from December 131. The basic qualifications for people to take advantage of the scheme is an income under a certain level, with debt of no more than Bt200,000 and being "determined to repay all debts".

A dessert vendor, who asked not to be named, said she welcomed the philosophy behind the policy. But she wondered what verification methods could be used between illegal money lenders and government mediators to settle debts.

"Who will decide on the actual amounts of debts? And who will verify the amounts if the money lenders just lie [about the actual debt amounts]"

But one money lender, who said he never used violence against creditors who failed to pay debts or made payments late, welcomed the project. He said it would benefit him if his clients could repay him with lowinterest money subsidised by the government.

Apart from factory workers and smalltime vendors, he said most of his clients were workers on salaries whose requests for loans were turned down by banks.

-- The Nation 20-11-09

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ref url:- http://nationmultimedia.com/2009/11/20/nat...al_30116974.php

marshbags and

Edited November 20, 2009 by marshbags

[dumpitin]

and after all is said and done poor people will still be poor! poor need jobs, something obama doesnt understand either.

one good thing about poor people for those in power is that you can fool them easily. give them 20$ and they think you god! evn if you are satan!

Edited November 20, 2009 by dumpitin

[Heng]

At street level though, in the real world, it's the poor who tend to actively, often enthusiastically, seek out money lenders, not the other way around.

You don't need to go to school to learn that 100 to 1 and 1000 to 1 odds in the underground lottery (X billions wasted by the poor each year), and millions to 1 odds in the legal lottery (ditto X billions wasted), and not drinking in moderation (X billions again in health care costs/lost productivity however you want to look at it) are poor financial decisions. The whole money lending situation is typically just the final puff of smoke in the tail spin of decision making that the poor partake in.

That said, I think there should be an enforced firm cap on interest rates with all business of this nature going to the banks, finance companies, and licensed pawnshops that operate legally. At least then it's a *little* more reasonable when the poor come out once in awhile to protest that they were too stupid to take 6% gov't loans instead of coming out to say that they were too stupid to take out a 60% per month loan from a local loan shark.

[neverdie]

I wonder how many of his customers default on a loan that charges 60% per month, 720% p.a. WOW.

[Heng]

I'd imagine the rate is pretty high. From what I hear, it usually never gets that far, as the collateral is either seized or the debtor takes off after having paid off virtually no interest or just a few hundred % interest.

[sceadugenga]

Reminds me of the old 5 and 6 loans that are popular with bargirls in the Philippines.

They borrow 500 pesos and pay back 600 at the end of the month. I suppose that runs into 240% pa, provided they don't let it compound of course, which a lot do, then it gets out of control very quickly.

[hammered]

If the government survives for a while this policy will win it a bunch of supporters provided they actually get the dosh of course;)

They could even reprise a Thaksin tactic and have "who beat the loan sharks? , Abhisit did." Dont sound quite right though

[hansnl]

Some time ago I helped out a family member, he had a loan of 20,000 baht with an intrest of 2000 baht per month, a cool 10% per month and 120% per year, as extra security he had to hand over his truck.

Had the money, paid the "bank" and went to collect the truck.

The "manager" was a member of a well known state agency, and the secure storage of the truck, being a lot for impounded cars & all, was managed by the same agency.

Edited November 20, 2009 by hansnl

[fatfather]

With proper papers of land it is possible to loan money for 1/2% per month at a bank. Does anybody know how high the max. legal interest rate per month is in Thailand? I know gold shops charge 3% per month, but I think the legal percentage is lower.

[hammered]

With proper papers of land it is possible to loan money for 1/2% per month at a bank. Does anybody know how high the max. legal interest rate per month is in Thailand? I know gold shops charge 3% per month, but I think the legal percentage is lower.

I think it 15% per annum

[lioness]

Max legal is 15% per annum.

I also helped out a family member, he had borrowed 35,000 Baht on 10% per month. I didn;t know anything about this until 12 months later when the financiers had come to throw him and his family out of his home.

The problem also is that they don't think, his interest only repayments were 3,500 Baht per month which was impossible for someone who earns 5,800 Baht a month, has a wife and 2 small children.

I wanted to take the matter further as 10% a month is daylight robbery in my humble opinion, but the family asked me not to do anything as they didn't want to end up dead.

[poldebol]

Max legal is 15% per annum.

I also helped out a family member, he had borrowed 35,000 Baht on 10% per month. I didn;t know anything about this until 12 months later when the financiers had come to throw him and his family out of his home.

The problem also is that they don't think, his interest only repayments were 3,500 Baht per month which was impossible for someone who earns 5,800 Baht a month, has a wife and 2 small children.

I wanted to take the matter further as 10% a month is daylight robbery in my humble opinion, but the family asked me not to do anything as they didn't want to end up dead.

Any source for the max legal of 15. I find 19% in 1990 in:

Peter G. Warr,Bhanupong Nidhiprabha: "Thailand's macroeconomic miracle: stable adjustment and sustained growth" p. 195. I wonder it has come down to 15 since then.

[LuckyLew]

Some time ago I helped out a family member, he had a loan of 20,000 baht with an intrest of 2000 baht per month, a cool 10% per month and 120% per year, as extra security he had to hand over his truck.

Had the money, paid the "bank" and went to collect the truck.

The "manager" was a member of a well known state agency, and the secure storage of the truck, being a lot for impounded cars & all, was managed by the same agency.

You call this helkping a family member?

No better than a loan shark

My family lends other family members money with no interest

[Theyreallrubbish]

At street level though, in the real world, it's the poor who tend to actively, often enthusiastically, seek out money lenders, not the other way around.

You don't need to go to school to learn that 100 to 1 and 1000 to 1 odds in the underground lottery (X billions wasted by the poor each year), and millions to 1 odds in the legal lottery (ditto X billions wasted), and not drinking in moderation (X billions again in health care costs/lost productivity however you want to look at it) are poor financial decisions. The whole money lending situation is typically just the final puff of smoke in the tail spin of decision making that the poor partake in.

That said, I think there should be an enforced firm cap on interest rates with all business of this nature going to the banks, finance companies, and licensed pawnshops that operate legally. At least then it's a *little* more reasonable when the poor come out once in awhile to protest that they were too stupid to take 6% gov't loans instead of coming out to say that they were too stupid to take out a 60% per month loan from a local loan shark.

The reason they go to loan sharks is BECAUSE they can't borrow from the banks. They're not totally stupid and would borrow from the banks if they could.

They borrow from loan sharks for two reasons, they don't have the right kind of documentation (6 month's salary slips, etc) or they need the money much faster than a bank can give it out (2-8 weeks)

The government recently passed the Financial Sector Masterplan Phase 2 through the cabinet and over the next few years laws will be changed to make it easier for licensed entities to lend in this sector. They're going to remove the cap on interest rates and make getting a license easier. (Although expect licenses to only go to the connected)

[Theyreallrubbish]

Some time ago I helped out a family member, he had a loan of 20,000 baht with an intrest of 2000 baht per month, a cool 10% per month and 120% per year, as extra security he had to hand over his truck.

Had the money, paid the "bank" and went to collect the truck.

The "manager" was a member of a well known state agency, and the secure storage of the truck, being a lot for impounded cars & all, was managed by the same agency.

You call this helkping a family member?

No better than a loan shark

My family lends other family members money with no interest

My understanding of reading his post is that the 10% a month rate is the rate he was already financed at before the poster paid it off.

[LawnGnome]

All in all, a nice program with good aims. Something that I hope brings some relieve to people who could use it.

[marshbags]

At street level though, in the real world, it's the poor who tend to actively, often enthusiastically, seek out money lenders, not the other way around.

You don't need to go to school to learn that 100 to 1 and 1000 to 1 odds in the underground lottery (X billions wasted by the poor each year), and millions to 1 odds in the legal lottery (ditto X billions wasted), and not drinking in moderation (X billions again in health care costs/lost productivity however you want to look at it) are poor financial decisions. The whole money lending situation is typically just the final puff of smoke in the tail spin of decision making that the poor partake in.

That said, I think there should be an enforced firm cap on interest rates with all business of this nature going to the banks, finance companies, and licensed pawnshops that operate legally. At least then it's a *little* more reasonable when the poor come out once in awhile to protest that they were too stupid to take 6% gov't loans instead of coming out to say that they were too stupid to take out a 60% per month loan from a local loan shark.

Agree with some of your observations, but you will appreciate that many do not have the benefit of stablity, finacial wise and many go to all sorts of extremes to secure loans.

Desperation takes over, not only for those considered poor finacially, but those who live beyond their means for what ever reasons, including abrupt unemployment.

Not forgetting the twice yearly fess for education ect. ect. they could once afford, but are now on harder times and cannot.

Hopefully education will back up the newly proposed assistance for those who need it.

Not a condescending statement on my behalf, just based on the local situation in my M Ban.

marshbags culture wise

Edited November 20, 2009 by marshbags

[Heng]

At street level though, in the real world, it's the poor who tend to actively, often enthusiastically, seek out money lenders, not the other way around.

You don't need to go to school to learn that 100 to 1 and 1000 to 1 odds in the underground lottery (X billions wasted by the poor each year), and millions to 1 odds in the legal lottery (ditto X billions wasted), and not drinking in moderation (X billions again in health care costs/lost productivity however you want to look at it) are poor financial decisions. The whole money lending situation is typically just the final puff of smoke in the tail spin of decision making that the poor partake in.

That said, I think there should be an enforced firm cap on interest rates with all business of this nature going to the banks, finance companies, and licensed pawnshops that operate legally. At least then it's a *little* more reasonable when the poor come out once in awhile to protest that they were too stupid to take 6% gov't loans instead of coming out to say that they were too stupid to take out a 60% per month loan from a local loan shark.

The reason they go to loan sharks is BECAUSE they can't borrow from the banks. They're not totally stupid and would borrow from the banks if they could.

They borrow from loan sharks for two reasons, they don't have the right kind of documentation (6 month's salary slips, etc) or they need the money much faster than a bank can give it out (2-8 weeks)

The banks have to draw a line somewhere or else it's not a bank at all, it's a buffet.

What I disagree with are those who live irresponsibly (and sometimes the most casual basic things like drinking, gambling, and having children without the means to support them are just enough to capsize modest family vessels) and then blame the lenders. And of course I disagree with the apologists who say things like 'they have a right to get drunk/gamble/finance that Honda Wave/Toyota Vigo/procreate to no end... it dulls their pain.'

You'd be surprised how 5-10-15-20 years, or better yet several generations of careful spending/saving/investing can negate to financial impact of 'sudden and unexpected tragedies' that people use as reasons why they 'need' emergency loans @ exorbitant rates.

Edited November 20, 2009 by Heng

[losworld]

So does this mean the police are getting into the loan shark business?

[Heng]

Agree with some of your observations, but you will appreciate that many do not have the benefit of stablity, finacial wise and many go to all sorts of extremes to secure loans.

I most certainly appreciate that financial stability generally doesn't happen by chance.

[Ski_Goong]

Some time ago I helped out a family member, he had a loan of 20,000 baht with an intrest of 2000 baht per month, a cool 10% per month and 120% per year, as extra security he had to hand over his truck.

Had the money, paid the "bank" and went to collect the truck.

The "manager" was a member of a well known state agency, and the secure storage of the truck, being a lot for impounded cars & all, was managed by the same agency.

You call this helkping a family member?

No better than a loan shark

My family lends other family members money with no interest

My understanding of reading his post is that the 10% a month rate is the rate he was already financed at before the poster paid it off.

Yup. That's my understanding too.

[marshbags]

38 loan sharks rounded up in Korat

By The Nation

Published on November 21, 2009

Police have made a series of arrests of loan sharks based in Nakhon Ratchasima, netting members of several rackets, some of which demand extremely high interest rates, up to 60 per cent daily, from their clients.

The 38 suspects arrested are believed to belong to a number of loan rackets, most of which have used intimidation or harassment against clients who fail to make daily repayment, said Pol MajGeneral Dechawat Ramsomphob, acting commander of Provincial Police Region 3, and the local chief of operations in an ongoing campaign against loan sharks.

The daily interest rates these rackets have charged clients range from 20 per cent to 60 per cent, he said. Some suspects have admitted to the crimes while many others denied their wrongdoings.

The police are making arrests of loan sharks across the country as a result of the government's newlylaunched campaign to settle "offsystem" debts between lowincome earners and illegal money lenders.

-- The Nation 21-11-09

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ref url:- http://nationmultimedia.com/2009/11/21/nat...al_30117050.php

marshbags

Edited November 21, 2009 by marshbags

[Thongkorn]

Maybe the Thai Banking system is partly to blame, if it would lend money at a reasonable rate and Help by making it easier to repay , say longer at a lower rate for the poor , maybe that would help, Also the people who put small amount of money in Thai banks don't seem to get a fair return on there Money while the big money depositors get more , it seems the more you put in the more you get in return which does not encourage small depositors.

[chiang mai]

Many poorer Thai people simply don't understand interest rates, they see the signs at the bank saying that interest rates are X but most do not understand that X is an annual rate and continue to think that 10% a month must be an acceptable norm.

[neverdie]

Wish I could get a 700% return on my investments p.a.

[moe666]

The government has a plan to pay off loans this week. What happens next week when the poor folks have another emergency and need another loan to pay a bill.

Being poor is a vicious cycle, and most donot have a pretty daughter to marry off to a farang.

[Heng]

Maybe the Thai Banking system is partly to blame, if it would lend money at a reasonable rate and Help by making it easier to repay , say longer at a lower rate for the poor , maybe that would help.

There are already banks for the poor... Omsin, Sonkro, Tor Kor Sor, etc. The problem is with being poor, there doesn't seem to be a lower limit of how poor you can be. Thus, like any other business that isn't a free for all buffet, they have to draw the line somewhere, and in the process, often because of sheer volume, they move and approve loans like dinosaurs.