Microcredits in Thailand can cost up to 33%

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bahtMicrofinance lenders in Thailand may be allowed to charge interest at up to 33 per cent a year, as such rates are still “far below” from what loan sharks collect, said a senior official of the Thai central bank as the institution is currently drafting regulations on licensing financial and non-financial institutions to extend microfinance loans.

The purpose is to attract more players to the segment so that low-income earners can borrow “conveniently” from official sources instead of turning to loan sharks, the Bangkok Post reported on September 10.

A “suitable interest” rate for microfinance loans will most likely be higher than 15 per cent a year. By law, the maximum yearly interest rate is 15 per cent for general loans, 20 per cent including penalty fees for credit card loans and 28 per cent for personal loans. A rate for microfinance loans may be set within a range of 25 to 33 per cent.

Microfinance is sometimes the only financial source for low-income and non-formal workers. As most financial and non-financial institutions shun the segment, these people mostly turn to loan sharks, who can charge whatever they like.

The central bank allows commercial banks to engage in microfinance, whereby no collateral is required, the credit limit is 200,000 baht and the highest annual interest rate is currently 28 per cent.

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Reading Time: 1 minute

Microfinance lenders in Thailand may be allowed to charge interest at up to 33 per cent a year, as such rates are still “far below” from what loan sharks collect, said a senior official of the Thai central bank as the institution is currently drafting regulations on licensing financial and non-financial institutions to extend microfinance loans.

Reading Time: 1 minute

bahtMicrofinance lenders in Thailand may be allowed to charge interest at up to 33 per cent a year, as such rates are still “far below” from what loan sharks collect, said a senior official of the Thai central bank as the institution is currently drafting regulations on licensing financial and non-financial institutions to extend microfinance loans.

The purpose is to attract more players to the segment so that low-income earners can borrow “conveniently” from official sources instead of turning to loan sharks, the Bangkok Post reported on September 10.

A “suitable interest” rate for microfinance loans will most likely be higher than 15 per cent a year. By law, the maximum yearly interest rate is 15 per cent for general loans, 20 per cent including penalty fees for credit card loans and 28 per cent for personal loans. A rate for microfinance loans may be set within a range of 25 to 33 per cent.

Microfinance is sometimes the only financial source for low-income and non-formal workers. As most financial and non-financial institutions shun the segment, these people mostly turn to loan sharks, who can charge whatever they like.

The central bank allows commercial banks to engage in microfinance, whereby no collateral is required, the credit limit is 200,000 baht and the highest annual interest rate is currently 28 per cent.

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