Banks to help people clear their informal debts

BANGKOK, 5 May 2016 (NNT)-The government is planning to help settle the informal debt problems of many citizens, by letting specialized financial institutions (SFIs) deal with the issue.

According to Government Savings Bank (GSB) Director Chatchai Payuhanaveechai, the Ministry of Finance is considering asking the SFIs to help turn informal debts, which are currently running at 1.3 million baht in total, into formal ones.

The move will be proposed to the Cabinet for approval. As for the GSB, Mr. Chatchai said the bank will allow people with informal debts to apply for a one percent interest rate loan so that they can return the borrowed money to the loan sharks.

-- NNT 2016-05-05

"1.3 million baht" ?????

And once the bank pays the shark, time to top up from them again. Free money!

Everything is geared towards people in debt, give them low interest rates (rates down again .25 %,

now the Banks are going to help them pay off the loan sharks, while if you have worked hard,not

wasted your money,saved a few bob,the interest rates you receive will not cover inflation.

regards worgeordie

It wont help as Thais are fiscally challenged, all the savers suffer.

This is, of course, a major windfall for loan sharks. The correct government response would have been immediately to legislate against the excessive interest rates charged by these people from this point forward. I agree with banks helping those already at the mercy of loan sharks, but only if urgent action is taken to prevent it continuing to occur.

"1.3 million baht" ?????

more like 1.3 trillion surely

But what mafia, controls the loan sharks? Is it some government person. Of unusual wealth?

This is, of course, a major windfall for loan sharks. The correct government response would have been immediately to legislate against the excessive interest rates charged by these people from this point forward. I agree with banks helping those already at the mercy of loan sharks, but only if urgent action is taken to prevent it continuing to occur.

Wholly agree. You've got to fix the issue going forward and back. Forward from the sense that you've put processes or laws in place to prevent it from occurring again, and together with that then you can talk about back - government intervention-type programs to address the existing balances.

I have never heard of informal and formal debt, something akin to how you dress for the Sunday session I suppose..................................

According to Government Savings Bank (GSB) Director Chatchai Payuhanaveechai, the Ministry of Finance is considering asking the SFIs to help turn informal debts, which are currently running at 1.3 million baht in total, into formal ones.

SFI = State-owned Financial Institutions like GSB, KrungThai Bank and a few others. Would not apply to commercial banks like Bangkok Bank, Kaiskon Bank, Krungsri Bank, Siam Commerical Bank, etc...etc...etc. And notice the statement said the Finance Ministry is "...considering asking SFIs..." Considering? Asking? Is that wishy-washy or what. I expect the SFIs, although state-owned/controlled, will do it if push comes to shove but the govt will most like guarantee the loan repayment which means taxpayer's baht will end up paying for bad/non-performing loans.

And once the bank pays the shark, time to top up from them again. Free money!

read article banks not pay shark as you say. Bank lend to people at low interstate so people can pay other loans of Good for Thai people

"1.3 million baht" ?????

more like 1.3 trillion surely

Peanuts. 1.3 trillion? Compared to the "nonperforming- loans" that the Banks already have on their books?

But they do what Banks did before the Real-Estate bubble burst in the US. = Declare unrecoverable debt as "Assets".

Hearsay? Yes! But Info supplied by 2 Stepdaughters, both employed by major Banks and both working in an environment, where the gangways and offices are carpeted.

I got the message,

Cheers.

And once the bank pays the shark, time to top up from them again. Free money!

read article banks not pay shark as you say. Bank lend to people at low interstate so people can pay other loans of Good for Thai people

The point is that others are saying that you are missing is ILLEGAL loans are being sanctionned

These SHARKS and why ar ethey called sharks??/ should be in prison

How will the size of a loan be properly determined? Will the person in debt just quote a figure, or will the loan shark be invited to the bank for a friendly meeting to discuss the matter? I assume in most cases there are no written agreements, so it will just be their say-so.

Either way, it would be a nice scam for the loan shark and the debtor to inflate the supposed loan amount, split the extra proceeds, and make use of some nice low interest capital. Loan sharks being financed by the government; now there's a grand idea.

"1.3 million baht" ?????

That'll be our soi.

"1.3 million baht" ?????

more like 1.3 trillion surely

The Justice Ministry’s Legal Aid Centre for Debtors and Victims of Injustice revealed recently that people in 40 provinces are burdened by off-system debts worth up to Bt1 billion.

Maybe the Ministry of Finance will only fund Bt1 million - just a spit in the ocean.

What is an informal debt?

An off topic post has been removed, this is not about the debt situation in Europe.

What is an informal debt?

An unsecured loan from other than a registered financial institution such as a bank, credit union or cooperative.

For example from a "loan shark".

Banks to help people clear their informal debts...

By seizing their formal assets...

Is this 1percent loan at a fixed rate as this is lower than some bank term deposit rates.

Banks to help people clear their informal debts...

By seizing their formal assets...

The reason people use loan sharks is that they don't have sufficient collateral (ie., assets) to get a conventional bank loan and even a pawn shop loan. It's likely the Thai government is quaranteeing repayment of these loans given the low interest rate to be charghed by the bank for these loans.

It's likely the Thai government is quaranteeing repayment of these loans given the low interest rate to be charghed by the bank for these loans.

And the consequence is paying for the inevitable defaults.