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Published on March 8, 2008

The Bank of Thailand (BOT) and four state agencies are to crack down on almost 300 loan sharks.

Veerachart Sriboonma, head of the central bank's legal prosecution office, said the BOT would ask for cooperation from the Interior Ministry's Damrongdhama Centre to come up with ways to charge illegal non-bank lenders and shut down their mobile-phone signals.

Regulators want to shut down underground non-bank companies because they believe that they threaten the Kingdom's economic stability and also cause social problems.

The companies take advantage of low-income people who have little or no financial knowledge by charging extremely high interest rates and taking a premium from the amount loaned.

"We have enough evidence to proceed further," Veerachart said.

The loan sharks include major players who have bank accounts of more than Bt100million.

The Bangkok Metropolitan Administration (BMA) gathered advertising leaflets distributed by 276 different loan sharks around the city.

The Office for Consumer Protection has also found advertisements for illegal personal loans in newspapers.

The Revenue Department has examined historical tax payments by the companies and Economic and Cyber Crime Division police are helping with the crackdown.

Veerachart said the state agencies have also approached legal non-bank companies to help find ways to eradicate the loan sharks.

The central bank is considering asking mobile-phone operators to shut down communication channels used by the illegal lenders, which was proposed by five non-bank companies in the meeting yesterday.

Apichat Nantaterm, executive director of Aeon Thana Sinsap (Thailand), said mobile phones were a significant business tool in loan sharking, because they provided an easy channel to connect potential borrowers and agents with illegal lenders.

He was optimistic that blocking cell-phone signals would put 99 per cent of illegal operators out of business.

Apichat said the social problem of people being squeezed by exorbitant interest rates would be reduced if the loan sharks were eradicated.

"Without mobile phones, they will not be able to communicate and cannot operate their businesses. It will cause them big problems if they get new numbers, because they will then have to keep printing new advertising leaflets," he said.

Currently, 30 personal-loan companies are legally operating, including Capital OK, GE Capital (Thailand), Cetelem (Thailand) and Easy Buy.

Anoma Srisukkasem

The Nation