PM Prayut to Use Section 44 to Regulate Loan Sharking

[webfact]

Prime Minister to Use Section 44 to Regulate Loan Sharking
BY JACOB MASLOW

BANGKOK: -- Prime Minister Prayut Chan-o-cha will use the powers granted by Section 44 of the interim constitution to address problems with loan sharking, according to Somchai Sujjapongse, permanent secretary for finance.

Mr. Somchai says General Prayut agrees with the ministry’s proposed solution to underground lending, which includes capping the maximum interest rate charged and the size of the loan.

To implement these new rules, the prime minister will invoke the powers granted under Section 44.

The plan, which will be submitted to the cabinet in July, prohibits private lenders from charging more than 15% interest per year. Lenders who violate the law will face civil and criminal penalties.

Full story: https://ethailand.com/business-news/pm-to-use-section-44-to-regulate-loan-sharking/2814/

-- eThailand 2016-06-08

[Pib]

If an informal lender wishes to charge more than 15% per year, he or she can seek a license to become a “pico financer” lender. In this case, a 50,000-baht cap would be placed on loan principal per borrower, and interest would be capped at 3% per month (36% per year).

Operators with at least 5 million baht in registered capital would qualify to become a pico financial institution. The lowered registered capital requirement is meant to attract predatory loan sharks and convince them to enter the formal financial system.

Or said another way get a business license from the govt which means you'll also be part of the tax system which means the govt will be able to collect taxes on your business--where you would be able to charge up to 36% per year "legally."

Although the article refers to the private lenders as "loan shocks" many times they are really just regular people, your neighbors/in-laws, who are trying to make extra money by loaning it out at high interest. I've know two of my in-laws who regularly do it...one works for the local district govt and the other one is a factory supervisor.

[rkidlad]

Well then, these loan sharks are in serious, serious trouble. 44 is coming to get you!

[jaltsc]

"Prime Minister Prayut Chan-o-cha will use the powers granted by Section 44 of the interim constitution to address problems with loan sharking, "

What's next...Regulating Homicide?

[affen02]

I think this is a good start in regulating the very shady and criminal private loan marked. A system that has driven many people to suicide. People it seems do not calculate the interest they have to pay when taking up these loans. I hope the big man use any law available to him to stop the loan sharking or regulate this insane and criminal practice witch make people lose their land and livelyhood, and we all know who benefit from this. In the area i live so many farmers for various reasons have taken up small loans to get by, havent been able to pay the unreasonable high interest maybe because of a bad rice season, sickness in the family or many other reasons. Their land is now beeing sold off for millions because of the boom in land prices. Tell me if this is fair, and were will it end?

[chainarong]

If an informal lender wishes to charge more than 15% per year, he or she can seek a license to become a “pico financer” lender. In this case, a 50,000-baht cap would be placed on loan principal per borrower, and interest would be capped at 3% per month (36% per year).

Operators with at least 5 million baht in registered capital would qualify to become a pico financial institution. The lowered registered capital requirement is meant to attract predatory loan sharks and convince them to enter the formal financial system.

Or said another way get a business license from the govt which means you'll also be part of the tax system which means the govt will be able to collect taxes on your business--where you would be able to charge up to 36% per year "legally."

Although the article refers to the private lenders as "loan shocks" many times they are really just regular people, your neighbors/in-laws, who are trying to make extra money by loaning it out at high interest. I've know two of my in-laws who regularly do it...one works for the local district govt and the other one is a factory supervisor.

Yeah Pib , just regulate under the finance act and license all money lenders , there is no need for section 44 , that way if people get into trouble on repayments they are dealing with a legal lender and they follow due process , if they want to borrow off the guy down the road that's their business , however they have no recourse if they default, unfortunately the need to bring this area into a more credible lending institution, as an alternative to other major institutions, will dither on for decades

[shirtless]

Thank god for Prayut , now we can all sleep well at night.

[CantSpell]

Abracadabra and hocus pocus, i invoke thy 44!!

Everything will be regulated without any further need of any enforcement...

Bravo!!

[gyrosman]

regulate loan sharking, supported by the government, interesting. I thought Al Capone was dead?????

[Winniedapu]

The banks must be suffering. The landed barons shout and Prayuth jumps.

W

[SOTIRIOS]

...another big challenge...

[icare999]

If an informal lender wishes to charge more than 15% per year, he or she can seek a license to become a “pico financer” lender. In this case, a 50,000-baht cap would be placed on loan principal per borrower, and interest would be capped at 3% per month (36% per year).

Operators with at least 5 million baht in registered capital would qualify to become a pico financial institution. The lowered registered capital requirement is meant to attract predatory loan sharks and convince them to enter the formal financial system.

Or said another way get a business license from the govt which means you'll also be part of the tax system which means the govt will be able to collect taxes on your business--where you would be able to charge up to 36% per year "legally."

Although the article refers to the private lenders as "loan shocks" many times they are really just regular people, your neighbors/in-laws, who are trying to make extra money by loaning it out at high interest. I've know two of my in-laws who regularly do it...one works for the local district govt and the other one is a factory supervisor.

Thye are all IMO nasty people loaning others is a vile way to make money and prays off those less fortunate. Id like ot see all of them put away and key thrown away its worse here than even pay day loans in UK I have notihng but total contempt fo all of them and I also know many so called just normal people do it

[icare999]

The banks must be suffering. The landed barons shout and Prayuth jumps.

W

what a stupid comment poor peole cant get loans from a bank

[Winniedapu]

The banks must be suffering. The landed barons shout and Prayuth jumps.

W

what a stupid comment poor peole cant get loans from a bank

How rude. Poor people can and do get repeating loans from banks, and Prayuth is trying to divert informal loans to the banking sector. Or perhaps you didn't know that. Perhaps you haven't been paying attention.

If you don't know what you're talking about, it would be better to say nothing. At least that would demonstrate better manners.

W

[Lannig]

It was my understanding that people turn to loan sharks because they are unable to provide the assets or guarantees required by banks to obtain loans.

I am misled?

[sawadeeken]

Feed all Loan Sharks to the sharks............ Double fold benefit......... Will get rid of some of the 'leeches' and at the same time give them 'leeches' a taste of their own medicine (teach them that what goes around - comes around)

[Happy Grumpy]

Did he get the $2m in cash that he refuses to declare where from, from loan sharking?

[Happy Grumpy]

It was my understanding that people turn to loan sharks because they are unable to provide the assets or guarantees required by banks to obtain loans.

I am misled?

That and for hi-lo dice games.

Banks don't usually give loans for them.

[Winniedapu]

It was my understanding that people turn to loan sharks because they are unable to provide the assets or guarantees required by banks to obtain loans.

I am misled?

Don't know, it isn't the case where I live. People often have formal bank loans and yet borrow from informal lenders for short-term needs. It is uite common for example for lenders to be besieged just before sugar cane is cut, and in that case, money-lenders often do quite well buying sugar cane already delivered and receipted at one of the local collection yards. In that case, it is an informal secured loan.

The cost of informal loans always used to be between 8% and 10% per month. Now, with the economy going belly-up. it is more normal to lend at 20% and upwards.

You probably haven't been misled, just not completely informed. Sure, many people go to informal lenders because they can't raise security for the banks, but that's not always the case; banks don't always require hard assets for guarantees, and informal lenders are similarly chary of lending to these folk, who often tour from village to village looking for a helpful lender. It's only recently in my area, that lenders have been communicating with each other to stop/limit serial bad-debt borrowers in economically hard times. Likre now.

[tomacht8]

That's good to hear.
Private lenders from charging more than 15% interest per year. Lenders who violate the law will face civil and criminal penalties.
If that is now enforced properly yet, good thing.