Multi-Million Baht Pattaya Illegal Money Lending Operation shut-down

[webfact]

Multi-Million Baht Pattaya Illegal Money Lending Operation shut-down



PATTAYA: -- In a joint news conference by the Chief of Banglamung District and the Royal Thai Navy on Tuesday night, it was announced that 5 people had been arrested accused of running a multi-million Baht illegal money lending operation in Pattaya.

Khun Sakchai, the Chief of Banglamung District confirmed the arrest of 5 people at two rented houses at the Green View Village in East Pattaya, at the culmination of an undercover operation involving a man who had borrowed 870,000 Baht and had paid back a staggering 2 Million Baht which included the original amount plus a considerable amount of interest.

Payments were still ongoing but the man had ran out of money and received a visit from two men who warned the borrower that harm would come to him if further payments were not made. At this point, he contacted Banglamung City Hall who used the man to located the headquarters of the operation so it could be shut down.

Full story: http://www.pattayaone.net/pattaya-news/134391/multi-million-baht-pattaya-illegal-money-lending-operation-shut-down/


-- Pattaya One 2014-07-09

[ClutchClark]

More good news.

Private lending seems to have an important role in several Asian cultures; however, when it reaches this level of extortion then its only right to punish the offenders.

If these guys want to steal from hard working people then they should work within the law and become bankers.

Edited July 8, 2014 by ClutchClark

[NeverSure]

Hmmm. So this illegal loan sharking operation gets shut down and people are arrested.

Yet Thai leaders suggest they'll arrange loans for farmers to pay back loan sharks.

On the other hand, we have warts.

[terryp]

but what will actually happen to them>? small fine etc then they just set up again under different leaders, until the laws are changed to make these people think deeply about the cost of this terrible business it will just keep rolling along

[shirtless]

Its good news these people prey on people down on their luck and keep them that way , Thank god they are out of business lets hope many more of these shady operators get put out of circulation.

[Cake Monster]

The real issue, is that there is probably as much money owed to all these illegal loan sharks ( and sometimes legal ones ) as there is owed to the main stream banking system here in Thailand.

We all know that household debt is rising again, ( official ) and this kind of " dark banking " is really distorting the true picture of Thailand.s wealth and ability to control spending, not just private spending, but Corporate, and Government spending also.

The bubble will burst soon, the same as it did in the western economies during 2006 / 2007, it will only take a large investment banking company to switch on to this for that bubble to burst.

[ericjt]

Has any report stated clearly how much interest these alleged "sharks" were charging -- the actual rate per year?

Paying back 2,000,000 Baht on an 870,000 Baht loan is no big deal if the loan was long term. In the US, it's standard to pay back over $300,000 on a $100,000 mortgage with single digit annual interest rates, if it's a long term 30 year mortgage. And nobody complains about that, or arrests the lenders.

Credit card lenders are even worse. They make 50% or more per annum (year) on the money they lend. And nobody is hauling them in to jail, or accusing them of loan sharking. (Maybe they should, but they aren't.)

Here's the credit card math: Most banks charge card holders 18%-30%/year per year on all amounts owed, after a 20-30 day free grace period; PLUS the bank collects another 2-3% for each purchase from each vendor. (The vendor pays a 2%-3% discount to the credit card company on each purchase, right?) And since credit cards run on a theoretical 30 day cycle, the lender is making 2%-3% from each vendor for loans of around 30 days each. That's an annual rate of 24% to 36% on the payments from the vendors.

Add the interest from the vendors to the interest and other charges paid by the card holders, and it's easy to get up to 50%-60% per year as the amount the bank is earning on the money it lends to its credit card holders. That's around 4%-5% per month.

Were these "loan sharks" charging more than that? If they were, then maybe they're right where they belong, but until the OPs clarify the actual interest rates involved, I'd suggest we withhold judgment on whether these perps are "sharks" or not.

The credit card companies have set the bar pretty high to make it into "shark" territory.

[petercool]

Perhaps the point is that these money lenders have no banking laws to follow, no license to operate, no company registration, pay no tax and do in fact charge interest that can be way above any credit card or bank - plus use strong arm tactics. The actual amount of interest tends to be be less relevant under those circumstances even if any reporter could ever learn what that interest was.