Loan-shark debt relief kicks off

Abhisit said there were about 1 million people trapped in a vicious cycle of debt burden and poverty.

"People every day write me letters and send messages asking me to help them on the debt issue," he told officials from the Finance, Interior and Justice ministries and representatives of state-owned banks.

He said the debt burden was not an individual predicament but also a problem of families, causing violence and insecurity in people lives.

He invited people in debt to loan sharks to come to the Government Savings Bank (GSB) and the Bank for Agriculture and Agricultural Cooperatives (BAAC) to register their debts between December 1 and 30.

The government will screen their debts and start to negotiate with underground lenders between February 1 and April 30 next year.

Debtors who pass the screening process will start to get loans from the state-owed banks in May.

The first condition is that the debt must not exceed Bt200,000 and must be money that was borrowed before yesterday.

The interest rate charged by the state-owned banks will not exceed 12 per cent per annum, or less if the repayment period is more than eight years.

The BAAC will take care of farmers and will require two guarantors for debts up to Bt100,000. For higher amounts, five people will have to jointly agree to guarantee the loans.

Finance Minister Korn Chatikavanij said the interest rate would be about 12 per cent per annum or less, much cheaper than the loan sharks' rate of 20 or 30 per cent per month.

For other debtors, the GSB will provide credit to refinance their debts, with an interest-rate charge of 0.5 per cent per month for loans of Bt30,000 and less and 0.75 per cent for bigger loans of up to Bt200,000. The bank will require a guarantor for loans worth Bt100,000 or less and two guarantors for loans up to Bt200,000.

The Government Housing Bank will look after its borrowers who have loans from sharks. The Small and Medium Enterprise Development Bank of Thailand will take care of commercial debts.

Krung Thai Bank, a state-owned commercial bank, will provide credit to state officials and employees of state enterprises, and the Islamic Bank of Thailand will refinance credit-card debts for those who are residents of provinces with an Islamic Bank presence.