Finance now looks to “Pico Finance” to help the poor out of heavy debts from loan sharks



BANGKOK: -- The Finance Ministry is now looking into ways to help poor people out of their debts from loan sharks.

The idea of “Pico Finance” has now come out on the table as a mean to a final solution to the longstanding problem of loan sharks or money lenders, in addition to earlier suggested “Nano Finance”.

Under the ministry’s idea, it will employ ‘Pico Finace’ and ‘Nano Finance’ to handle loans at rural level.

Pico Finance will handle smaller cases and with loans not exceeding 50,000 baht whereas ‘Nano Finance’ will handle larger loans up to 100,000 baht.

In both loans, interest charge must not exceed 36% per year and the ministry is making preparations to have the proposal approved by the National Legislative Assembly.

Finance Minister Apisak Tantiworawong said the ministry was looking into a final solution to the country’s unregulated or unofficial loans problem.

He stated that in order to effectively tackle the problem a comprehensive and integrated program must be devised and will require the cooperation of a number of departments.

But he said that it will take several months before anything concrete emerges.

He said the main impetus will be to extricate the majority of people who are deep in debt from these unsolicited loans so that they can be looked after by the state.

In the past many attempts have been made to tackle the problem but most have met with failure and most of the unregulated loans were left to deteriorate into bad debt or nonperforming loans, he added.

Source: http://englishnews.thaipbs.or.th/content/164734


-- Thai PBS 2016-05-25

It's like the failed war on drugs. The issue isn't supply, it's demand. If you had a street of hundreds of lenders with interest rates from 1-2% (banks, finance companies, etc.) to 30% (sharks, etc.)... the typical person with the 'okay to be in debt' mentality will go to each lender until they get their funds, no matter what the interest rate. The problem is not 'I don't know where to find low cost capital.' The issue is 'low cost capital cannot afford me as a customer because I am too much of a risk to lend to.'

Only way is to come down heavy on loan sharks - confiscation of all their assets!

And then, liquidate these assets for the Pico finance scheme.

Edited May 25, 201610 yr by trogers

There is plenty of money available in my area already at 3%/month but payed annually if the borrower can show he has a way to repay. Without such loans most farmers wouldn't have enough money to carry on farming.

Wonga and other loan companies in the UK charge a lot more than most villagers pay for their loans and want the interest monthly.

It is called capitalism over there. Not very nice but a fact of life.

About 20 years ago I had some friends among the bar girls in BKK and the typical interest rate back then was 20 baht per 1,000 baht borrowed

PER DAY.

I have no idea what the rate is now.

Just a thought but how long will it be before those helped out are back in it up to their necks ?

" interest charge must not exceed 36% per year"

And they think that they are doing these people a favor?

Edited May 25, 201610 yr by bluebluewater

Keeping up with the Somchais will be the death of Thailand, which appears to be going through the same materialistic phase which overtook the West as affluence spread following the last world war.

Thai families need to learn how to stay out the "heavy debt" trap that nine out of ten have fallen into - 60 per cent of them with the help of loan sharks.

Past governments, such as that of the Thaksins, have a lot to answer for their populist policies which incentivised thousands of people to take out loans for expensive items, such as cars and homes, which in reality they could not afford.

The firefighting measures by the present administration to rescue the hardest-hit victims of loan sharks are commendable, but in the long term only a nation-wide campaign to change attitudes to reckless borrowing and gambling will prevent Thais from becoming a nation of debt slaves.

Unfortunately, the government's penchant for throwing money around like confetti in a bid to kick-start a moribund economy may not be universally viewed as leading by example.

About 20 years ago I had some friends among the bar girls in BKK and the typical interest rate back then was 20 baht per 1,000 baht borrowed

PER DAY.

I have no idea what the rate is now.

It always used to be charged at 9%-10% per month. Nowadays, 20% per month is more typical, but 2% per day is 60% per month simple interest. That seems very high, but many Thais will borrow at that rate rather then borrow from a bank, even those who borrow from a bank are expected to pay a fee to the bank manager, and because they can't repay at the end of the term, they borro again to repay the original loan, plus a bit of spending money. Another 'fee' to the manager and a higher interest rate.

It's amazing really, I don't know what it's like in the real world these days but I can't imagine it's like this, this is just legalised thievery. Exploitation on a humungous scale.

Winnie

About 20 years ago I had some friends among the bar girls in BKK and the typical interest rate back then was 20 baht per 1,000 baht borrowed

PER DAY.

I have no idea what the rate is now.

Between 20 and 50% per day in our village for small loans of typically 100 to 1000 bht

This is Stupid to get them out of the debts for Free, they will spend more money and go back to the Loansharks ,,,,Its OK The Government will help us out again,,,, SOOOooo easy it even ain't Funny,,,,,

Just a thought but how long will it be before those helped out are back in it up to their necks ?

At the rate of 36% my guess is as soon as the ink is dry.

Only way is to come down heavy on loan sharks - confiscation of all their assets!

And then, liquidate these assets for the Pico finance scheme.

Just make it illegal for anyone to hold land or property documents of anyone else. As this is the usual "security" for a loan shark loan it would render loan sharks very vulnerable to prosecution.

Why? There are no usury laws on the books in Thailand? Start arresting Loan Sharks. If's it is legal.......<well what can I say>?

that banks here encourage thais to waste their savings. thats why when you open up a bank account, its default to savings. and everything come out of it. savings account is not for saving money in thailand.

I think mafia money lenders should be shot or put in jail.

How about learning some self control, if I cant afford it i dont buy it...........worked for me for 50 odd years.

Part f the fun of saving hard for something is the wait to get it, nobody need starve in Thailand food is growing almost everywhere.........unfortunately pick ups and the latest phones dont

Edited May 26, 201610 yr by kannot