BANGKOK – Thailand’s Ministry of Finance has officially told all providers of informal or unregulated loans are to register their businesses, otherwise they will face tough legal action.
The warning by the Ministry of Finance followed yesterdayâ€™s meeting of the committee in charge of unregulated or informal loans.
The ministryâ€™s permanent secretary Somchai Sujjapongse revealed that the ministry was in the process of calling on all providers of such loans to officially register their businesses.
The action followed recent cabinetâ€™s decision to regulate all unregulated loans businesses, he said.
Meanwhile the Ministry of Justice is reported to be preparing new legislation on the issue for the cabinetâ€™s approval.
As such, there is no need for the government to invoke Section 44 of the interim constitution to take action.a against loan sharks.
Under the new legislation military, police and internal security personnel will be tasked with the responsibility of checking on and making sure that all providers of unregulated or informal loans throughout the country register their businesses in order to be granted permits to provide Pico Financing at the provincial level.
These businesses can apply for these permits with either the Government Savings Bank or the Bank for Agriculture and Agricultural Cooperatives.
Failure to do so and continuing to provide informal loans while charging interest in excess of 15% will result in criminal charge to be imposed on violators.
Source: Thai PBS
Read: Illegal Lenders and How they Cheat Poor People by Jon Fernquest
Most borrowers are low-income villagers or vendors upcountry, many turn to loan sharks after financial institutions reject them because they have no steady sources of income or assets to use as collateral.