PRIME MINISTER Prayut Chan-o-cha has urged the establishment of so-called pico-finance operations nationwide to offer low-income people an alternative to resorting to loan sharks, while setting a deadline to eliminate 200,000 informal lenders within two years.
Pico-finance is similar to the better-known microfinance system but provides smaller loans needed primarily by households and individuals.
Giving a speech on “Comprehensive Solutions to Underground Debt Problems with Sustainability” at an event held by the Finance Ministry and other related units yesterday, Prayut stressed that the government wanted to have pico-finance operators in every province to allow people to gain access to capital in a system with fair lending rates.
He also asked informal lenders to make themselves legitimate by obtaining pico-finance licences. To date, six operators have been granted the licences.
According to estimates, there are about 200,000 informal lenders in the country, many of which charge exorbitant interest rates, creating an unfair burden for low-income borrowers.
Prayut said the granting of pico-finance licences in six provinces was a start towards eliminating this problem, and he wanted the project expedited so that every province was covered.
He said the government would hear complaints on loan-shark issues.
The pico-finance licences allow operators to collect interest on small loans at no more than 36 per cent per annum. More than 7 million low-income earners were registered with the government last year. A million of these, or 19 per cent, had underground debts worth a total of Bt86 billion.
Prayut said solutions to the loan-shark problem must be developed to link people with community financial institutions, savings cooperatives and village funds.
Solving the underground debt problem must be done in tandem with increases in people’s incomes, while strengthening the country’s economy as the base for higher incomes in the future, he said.
Thailand’s economic restructuring, investment in mega-projects and special economic zones will be emphasised, and that will help raise people’s incomes, the junta chief said.