Thai government to address non-formal loans

BANGKOK, August 23 (TNA) - The Thai government, through the Ministry of Finance, is accelerating addressing the problem of non-formal loans to assist low-income earners. Thai Finance Minister Apisak Tantivorawong told journalists of the move, after the recent registration of low-income earners nationwide showed that about 1.3 million, out of a total of 14.1 million people who came out for the official registration, have been indebted to their lenders in the non-formal sector. Apisak stressed that his ministry is speedily solving the problem of the non-formal loans, now standing at least 70 billion baht as shown in the official data, to assist the low-income earners. According to the minister, he has assigned the Government Savings Bank (GSB) and the Bank for Agriculture and Agricultural Cooperatives (BAAC) to earmark a total fund of 10 billion baht for providing a soft loan of 50,000 baht each to low-income earners at the lending interest rate of only 0.85 per cent monthly instead. The minister said for lenders in the non-formal sector, more and more of them have decided to enter the formal system through the PICO Finance Program launched by his ministry to avoid legal action against those who are found remaining lenders in the non-formal sector with interest rates imposed to each of their clients of higher than 15 per cent yearly. Krisada Chinavicharana, Director-General of the ministry's Fiscal Policy Office (FPO), told reporters, meanwhile, that there are now 119 licensed operators of PICO Finance nationwide, out of a total of 322 applications, 60 of which have started providing loans to their clients. Under the PICO Finance Program, launched by the Thai Ministry of Finance to encourage lenders in the non-formal sector to enter the formal system as a solution to the problem of non-formal loans, a licensed operator of the program is legally-required to be a business firm with registered and paid capital of at least five million baht and is eligible to provide loans at the maximum of 50,000 to each of their clients at the interest rate of 36 per cent yearly, including the amounts of fees and fines it imposes on each of the clients. Besides, operators under the PICO Finance Program are required to follow the consumer protection law and other relevant laws. (TNA)