webfact Posted December 7, 2010 Share Posted December 7, 2010 BUSINESS Anti-loan shark bank approved By THE NATION Thailand Post yesterday received the Cabinet's nod to set up "Post Bank", offering microfinance to those with difficulty accessing conventional loan sources. The wholly owned subsidiary, which will be capitalised at Bt50 million, will provide loans of up to Bt10,000 to individuals at low interest rates, Information and Communications Technology Minister Chuti Krairiksh said. The funds will come from Thailand Post's internal cash flow and loans from the Government Savings Bank. Finance Minister Korn Chatikavanij said the first loan was expected to be made in February. The interest rate has not yet been decided but it would not exceed 28 per cent. The government expects between 14 million and 18 million people who currently borrow from loan sharks to turn to this new institution, he said. On October 5, the Cabinet approved in principle the ICT Ministry's proposal to allow Thailand Post to provide the microfinance service to low-income earners and to solve the loan-shark problem. Last year, of 38 million people of working age, from 20-59, an estimated 18 million lacked access to formal loans. Recently Thailand Post said people would be recruited with expertise in microfinance and related regulations to run the unit. Thailand Post sees a good opportunity in the microfinance business, provided the new activity is managed well and associated risks are contained. The Finance and ICT ministries believe Thailand Post can draw on its 1,200 post offices nationwide and 22,000 employees to provide financial services to the grass roots. Thailand Post will pilot the service at 10 branches across the country. The subsidiary will seek partners to enhance its operation and will offer the complete financial service within two years. Thailand Post's main business is postal services, which contributed 80 per cent of total revenue of Bt15 billion last year, followed by logistics and over-the-counter bill payments. It posted Bt916 million in net profit last year. The Cabinet also approved the Government Savings Bank's Bt2-billion loans to freelance workers as well as the Budget Bureau's proposal to channel foreign-exchange gains of Bt5.8 billion to disaster relief. -- The Nation 2010-12-08 Link to comment Share on other sites More sharing options...
JoePai Posted December 8, 2010 Share Posted December 8, 2010 Hahaha - all heart, quote : The wholly owned subsidiary, which will be capitalised at Bt50 million, will provide loans of up to Bt10,000 to individuals at low interest rates, Finance Minister Korn Chatikavanij said the first loan was expected to be made in February. The interest rate has not yet been decided but it would not exceed 28 per cent. Link to comment Share on other sites More sharing options...
haveaniceday Posted December 8, 2010 Share Posted December 8, 2010 Set up to avoid loan sharks and interest rate not to exceed 28% from a BOT rate of 2% !!!!!!! Maybe that reflects how much the expect to get paid back. 10,000b max, a step to help people in need maybe, will be very popular with the poor. Link to comment Share on other sites More sharing options...
TAWP Posted December 8, 2010 Share Posted December 8, 2010 I think they have misunderstood what micro-finance/loan NGO's actually do. And since they forbid them to operate in Thailand they now try to implement one themselves...badly. Super. Link to comment Share on other sites More sharing options...
supaprik Posted December 8, 2010 Share Posted December 8, 2010 (edited) Recently Thailand Post said people would be recruited with expertise in microfinance and related regulations to run the unit Perhaps recruitment will start at government house, seems like there is plenty of experiance there Edited December 8, 2010 by supaprik Link to comment Share on other sites More sharing options...
asiawatcher Posted December 8, 2010 Share Posted December 8, 2010 Whilst Thailand's poor need to eradicate the loan sharks, the banks should have a non recourse policy overall and this would lead to non-prosecution however, it may just work as poor people seem to have greater ethics than the rich! In other western countries micro-finance has indeed worked well with very low delinquency levels. I would not poo-poo the scheme at this point and a little more than 1.5M USD is not a risk factor as banks write that off every week on credit card failures! At least it could kick start some entrepreneurs! Link to comment Share on other sites More sharing options...
Thaddeus Posted December 8, 2010 Share Posted December 8, 2010 Bye bye Bt50 million. Hello motorcy papers. Link to comment Share on other sites More sharing options...
Pib Posted December 8, 2010 Share Posted December 8, 2010 Hopefully the rate won't be 28%, but something lower...kinda like how credit cards say their max rate could be up to XX% but it's usually much lower unless your credit is bad. But definitely a good deal to be able to get a loan from the Thailand Post who won't come to break your legs if you are late on your payment. I expect the loan program will be very popular as many Thai's are always borrowing money for short terms. I see it in the wife's village all the time with a few thousand baht being borrowed from family/friends to pay some bill(s) and the money is usually paid back within a few days/weeks/months after the borrower has got their biweekly/monthly pay or accomplished some short term work....or maybe just borrowed some money/pawned something to pay back the loan. But regardless, there is a lot of micro-financing going on everyday in Thailand...some with good terms...some with bad terms....hopefully this will help to reduce the number of loans with bad terms. Link to comment Share on other sites More sharing options...
angiud Posted December 8, 2010 Share Posted December 8, 2010 The interest rate has not yet been decided but it would not exceed 28 per cent. Legal loan sharks fighting against illegal loan sharks Link to comment Share on other sites More sharing options...
bangon04 Posted December 8, 2010 Share Posted December 8, 2010 I thought this was why Thailand had so many gold / pawn shops. Microfinance at its best, controlled by the Chinese of course. Link to comment Share on other sites More sharing options...
fatfather Posted December 8, 2010 Share Posted December 8, 2010 I thought that the max. legal intrest rate is ~15% per year. How can they brake their own laws?????? Link to comment Share on other sites More sharing options...
Pib Posted December 8, 2010 Share Posted December 8, 2010 I thought that the max. legal intrest rate is ~15% per year. How can they brake their own laws?????? I think it is for a personal loan you would get from the bank if you had good enough credit to get a loan from a bank. But I think this loan program is probably using credit card type max loan rates which can be much higher for those who are less credit worthy. . Link to comment Share on other sites More sharing options...
gregb Posted December 8, 2010 Share Posted December 8, 2010 I thought that the max. legal intrest rate is ~15% per year. How can they brake their own laws?????? Maximum rate is 28% APR. This could be close to around 15% simple interest, depending on length of the loan, so perhaps that is where the confusion originates from. I think this is a wonderful opportunity for the country, however I really want to see the details. Microfinance works in most countries because it requires you to get the support of your peers, and if you don't pay back, then they must. It is that personal feeling of responsibility which induces you to meet your obligations. Few feel the need to pay back an institution, nor even someone they can easily run away from. However, if you know your good friends are going to be on the hook for your debts, and those friendships are important to you, then you tend to try and do your best to make good. I am very curious to see how the Thai Post, (run by your friendly CAT), is going to be able to make this work. Sounds like a recipe for disaster in reality. I suspect it will turn into another village fund scheme, where everyone gets loans that are never paid back, just continuously rolled over for a small fee.... Link to comment Share on other sites More sharing options...
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