MICROCAPITAL BRIEF: Bank of Thailand (BOT) to Aid Non-Bank Lenders in Providing “Nano-Loans” of $3040 to $3650

The Bank of Thailand (BOT), the country’s central bank, recently announced that it will introduce a “nano-financing” financial education scheme to enhance the ability of non-bank lenders to provide “nano-loans” that range from THB 100,000 (USD 3040) to THB 120,000 (USD 3650) and carry an annual interest rate of 30 to 36 percent. Typical micro-loans have a maximum loan amount of THB 200,000 (USD 6090) and an interest rate of 28 percent per year. BOT’s role in this initiative will be to identify non-bank lenders and their borrowers in each of the country’s 76 provinces and provide an unspecified form of financial education to both parties. According to a statement attributed to Chirathep Senivongs na Ayudhya, BOT’s spokesperson, the country’s provinces already have functioning markets for nano-loans, and BOT’s initiative will provide clarity, fairness and transparency in these transactions.

Chirathep Senivongs na Ayudhya allegedly stated that “Commercial banks have tried to extend to smaller branches but they have failed to reach customers with smaller financial needs. This has resulted in borrowers getting loans from outside the financial system where interest rate is unregulated and there is no protection of the law. Nano-finance can help ease this problem.”

In 2013, BOT disbursed THB 74.4 billion (USD 2.26 billion) into the financial system and held currency reserve assets totaling THB 1.5 trillion (USD 46 billion)

By Ananya Tiwari, Research Associate

About The Bank of Thailand (BOT):
The Bank of Thailand (BOT) is the country’s central banking authority and regulator of monetary policy. It was established in 1942 and is headquartered in Bangkok, Thailand. BOT is tasked with regulating and supervising all financial institutions operating in Thailand. In 2007, BOT undertook a restructuring of the banking sector in an effort to provide opportunities for both commercial banks and retail banks to conduct microfinance services. In 2012, BOT announced the Payment Systems Road Map 2012-2016. This is the third roadmap in a series and focuses on expanding the use of electronic payment systems, enhancing security for debit and ATM cards, and expanding international payment capabilities. In 2013, BOT disbursed THB 74.4 billion (USD 2.26 billion) into the financial system and held currency reserve assets totaling THB 1,520 billion (USD 46 billion)

Sources and Other Resources

[1] Nation Multimedia, http://www.nationmultimedia.com/business/BOT-considers-nano-financing-for-grass-roots-peopl-30246202.html

MicroCapital, September 25, 2014, “Alliance for Financial Inclusion (AFI) to Move Headquarters From Thailand to Malaysia in 2015,” https://www.microcapital.org/microcapital-brief-alliance-for-financial-inclusion-afi-to-move-headquarters-from-thaliand-to-malaysia-in-2015/

MicroCapital, December 2013, “Thailand’s Ministry of Finance Caps Microfinance Interest Rate at 3% Monthly, Sets Capital Requirement at $311k,” https://www.microcapital.org/microcapital-brief-thailands-ministry-of-finance-caps-microfinance-interest-rate-at-3-monthly-sets-capital-requirement-at-311k/

MicroCapital, June 1, 2011, “Bank of Thailand Introduces Guidelines to Promote Microfinance, But Interest Rate Ceiling Reportedly Discourages Commercial Banks,” https://www.microcapital.org/microcapital-brief-bank-of-thailand-introduces-guidelines-to-promote-microfinance-but-interest-rate-ceiling-reportedly-discourages-commercial-banks/

MicroCapital Universe Profile: Bank of Thailand, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bank+of+Thailand+%28BOT%29

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