Finance Ministry to allow Pico Finance operators to lend outside provinces
The Finance Ministry plans to allow Pico Finance operators to lend across provinces, expanding access to microloans.
The Finance Ministry plans to allow Pico Finance operators to lend to clients outside the provinces where their firms are based, Deputy Finance Minister Julapun Amornvivat said on Tuesday.
Julapun explained that the ministry was in the process of considering enabling Pico Finance operators to expand their businesses to nearby provinces. Currently, Pico Finance operators are only allowed to lend to clients in the provinces where they are permitted to operate.
Pico Finance is a type of microfinance business in Thailand that focuses on lending to individuals at the provincial level. These loans are often aimed at people who may not qualify for traditional loans from banks or other financial institutions.
Julapun stated that Pico Finance operators must have at least 10 million baht in paid-up capital. They would be permitted to provide loans to people living in surrounding provinces from the provinces where they are allowed to operate.
The loan limit for individuals in adjacent provinces would be 100,000 baht per person.
Julapun added that only Pico Finance operators with risk management plans would be allowed to expand their operations to nearby provinces. These risk management plans should include:
- Measures to identify clients
- Measures for collecting installments from clients
- Measures to remind debtors to honour loan contracts
- Criteria for loan approvals.
Julapun said the plan to allow Pico Finance operators to expand their operational areas was aimed at making it more convenient for people living at the edges of provincial boundaries. These individuals might be able to access loans from operators in adjacent provinces, which could be closer to them.
The plan would also enable Pico Finance operators to broaden their client base and potentially encourage lenders outside the formal financial system to enter the system, offering loans lawfully under the supervision of the Finance Ministry.
He concluded that the Finance Ministry is currently revising the relevant directives to allow Pico Finance operators to lend in adjacent provinces. The revised directives will be subject to public consultation before being sent to the finance minister for approval.
