FRIDAY, March 29, 2024
nationthailand

Tisco unit's microfinance product a boost to small firms

Tisco unit's microfinance product a boost to small firms

THE AUTO refinancing arm of Tisco Bank, Hi-Way Co, is expanding into microfinance to help strengthen its portfolio with a type of lending that can help people enter the official financial system and avoid loan sharks.

Hi-Way has offered refinancing under the Somwang Ngern Sang Dai brand to tap low-income people who own vehicles, and it features the lowest interest rates in the auto-refinancing industry. It charges monthly interest of 0.55 per cent for four-wheel vehicles, 0.66 per cent for six-wheel trucks and above, and 1.25 per cent for motorcycles.
The company initiated a microfinance product under the Somwang Sabai Jai brand two months ago by cooperating with the Thai Credit Guarantee Corporation to help self-employed people get out from under the thumb of loan sharks, said Yuttpong Sriwongjanya, head of retail banking at Tisco Bank and executive director of Hi-Way.
Borrowers of these unsecured loans who are self-employed must have verifiable means of earning revenue so the company can estimate their monthly income before granting a microfinance loan, he said.
Fairy Charoenkhun, 38, a rice and curry vendor in a fresh market in Chiang Rai province, applied to Somwang Sabai Jai because she wanted to escape the underground lending system.
She had borrowed Bt5,000 from a loan shark in hopes that this money would help her set up a small rice and curry shop, but it turned out to be a bad move.
“I had daily income of Bt2,000 but I had to pay daily interest of Bt200 to the creditor. As long as I was unable to raise the Bt5,000 principal, I would have had to pay interest of Bt200 every day. Even if my shop could generate daily income of Bt4,000, I wouldn’t have had enough money to pay the principal,” Fairy said.
 
Free from loan sharks
She said she wanted to expand her product line but she did not have enough money, so when Somwang staff introduced the microfinance programme at the fresh market two months ago, she thought it might help her escape the loan shark’s clutches.
She borrowed Bt50,000 from Somwang Sabai Jai, with which she repaid her total debt of Bt6,000 to the loan shark, then she spent some money to buy new cooking equipment and reserve Bt1,900 a month to repay the microfinance debt. 
She is now able to save money because apart from getting the loan from Hi-Way, the company has advised her on household accounting.
Krongkwan Terruem, 34, owner of a coffee shop in Chiang Rai, is a customer of Somwang Ngern Sang Dai, having used her vehicles as collateral to Bt100,000 in cash to run the shop.
“The low interest rate and a convenient process made me feel more comfortable than asking for a loan at a bank. 
“If I have enough money, I can repay the whole debt within the term of the loan without paying penalty charges,” she said.
Hi-Way managing director Supachai Boonsiri said that apart from the lowest interest rates in the industry, the company allowed customers to make early repayments, even though this policy means low growth in outstanding loans.
The company targets outstanding loans of Bt8 billion this year, representing growth of 30 per cent from Bt4 billion as of the end of 2014. 
However, in the first seven months, outstanding loans increased only slightly to Bt4.8 billion.
 
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