webfact Posted December 10, 2012 Share Posted December 10, 2012 UNDERGROUND LENDING Sharks may be registered in bid to curb interest rates Suphannee Pootpisut The Nation Loan sharks may be allowed to register with the Finance Ministry in a bid to bring down the interest rates they charge. BANGKOK: -- "The United States has allowed underground lenders to register their businesses, and Thailand might apply this model to solve [problems related to] our off-system money market," Somchai Sujjapongse, director-general of the Fiscal Policy Office, said yesterday. The borrowers would be assisted by state-owned banks through new loans or refinancing. The new lending window would be part of the usual business of those banks, he said. Registered loan sharks could charge more than market rates but not by much. The maximum rate would be set by law. A bill will be proposed to the government and it will depend on the policy-makers to implement it, Somchai said. The office floated this idea before but it was shot down by the finance minister. It seems to be a win-win solution, he said, as loan sharks could run their business legally and still receive appropriate returns while debtors would not face usurious interest rates. The office is also drawing up a plan to help borrowers who cannot access bank loans and have to resort to loan sharks. Several governments have tried to help them by initiating short-term measures, and they were implemented mostly by state-owned banks, such as the Government Savings Bank, Islamic Bank of Thailand, Bank for Agriculture and Agricultural Cooperative, Small and Medium Enterprise Development Bank and Krungthai Bank. Those banks may be assigned to design new lending products to support those wanting to borrow to refinance underground loans. The maximum loan for each individual may be fixed at Bt10,000 with the interest rate much lower than those charged by loan sharks. State-owned banks will be asked to report to the Finance Ministry about their new lending activities. The State Enterprise Policy Office will set guidelines for banks on the implementation of the refinance loans. After the debt restructuring is completed, borrowers can turn to state-run banks to refinance their obligations. Rising household debt is not a concern, Somchai said, as it has not yet reached a critical level. The Bank of Thailand has asked banks and non-banks to refrain from campaigning heavily for spending on credit, but most debts are mortgages that generate wealth for the home-owners, he added. The National Economic and Social Development Board has recently said that household debt in the third quarter of this year soared but repayment ability dropped. Outstanding consumer loans surged 20.4 per cent year on year to Bt2.75 trillion while defaults on personal loans jumped by 37.8 per cent and on credit cards by 11.1 per cent. Government policies such as village funds and first-car and first-home purchase schemes have been blamed for helping to drive up household debt. -- The Nation 2012-12-11 Link to comment Share on other sites More sharing options...
chainarong Posted December 10, 2012 Share Posted December 10, 2012 Sharks are not easy to catch, one wounders if they would want to be tagged and registered , they then will have to pay tax. Link to comment Share on other sites More sharing options...
WhizBang Posted December 10, 2012 Share Posted December 10, 2012 Yeah, this'll work. NOT. 2 Link to comment Share on other sites More sharing options...
Popular Post dcutman Posted December 10, 2012 Popular Post Share Posted December 10, 2012 Rising household debt is not a concern, Somchai said, as it has not yet reached a critical level. Outstanding consumer loans surged 20.4 per cent year on year to Bt2.75 trillion while defaults on personal loans jumped by 37.8 per cent and on credit cards by 11.1 per cent. Hey Somchai, When will you become concerned? After defaults have reached a critical level? Great plan! "Money for nothin and checks for free" Dire Straits. 4 Link to comment Share on other sites More sharing options...
Popular Post edwinchester Posted December 10, 2012 Popular Post Share Posted December 10, 2012 Yeah, this'll work.NOT. Have to agree. Local guys are charging between 20 and 50% A DAY!!! Can't see them being inclined to register at all. 3 Link to comment Share on other sites More sharing options...
Popular Post JeremyBowskill Posted December 11, 2012 Popular Post Share Posted December 11, 2012 how would a loan shark break yer legs legally................ 5 Link to comment Share on other sites More sharing options...
jcw Posted December 11, 2012 Share Posted December 11, 2012 I read this annually, nothing changes. Our main local guy charges 20% Per month on the entire amount until all is paid. On a loan of 30k they have to pay 6000B a month just in interest, even if they have 500B of the principle remaining. I find this hideous, but then again most of his customers get in to the problem voluntary via gambling. 2 Link to comment Share on other sites More sharing options...
Popular Post noitom Posted December 11, 2012 Popular Post Share Posted December 11, 2012 Whoa!! This comment, "The United States has allowed underground lenders to register their businesses, and Thailand might apply this model to solve [problems related to] our off-system money market," Somchai Sujjapongse, director-general of the Fiscal Policy Office, said yesterday. Attempting to rationalize his proposal is totally out of context when attempting to compare it to the US Money Store and other lenders. Lenders in the US are tightly regulated and borrowers are protected by strict consumer protection laws. To cite this US example model as a justification premise for some Rube Goldberg/Heath Robinson type Thai scheme in the planning is a total misrepresentation and sham. In addition, the newspaper should be called into question for publishing this comment unchecked and validated for facts and accuracy. In addition to this blatant misrepresentation of the US private lending segment, this article has numerous other errors and inconsistencies. Newspaper articles such as this are part of the consumer debt issues in Thailand for misrepresenting the facts and distorting the truth. 6 Link to comment Share on other sites More sharing options...
theblether Posted December 11, 2012 Share Posted December 11, 2012 At least the authorities are looking at it. As usual they are damned if they do or damned if they don't on Thaivisa. 2 Link to comment Share on other sites More sharing options...
sirchai Posted December 11, 2012 Share Posted December 11, 2012 "Registered loan sharks could charge more than market rates but not by much. The maximum rate would be set by law." What about those who break first knee caps, if they can't pay and when they have to come back they offer them it might be better they hang themselves? I doubt they want to be registered.---- Link to comment Share on other sites More sharing options...
Popular Post yellow1red1 Posted December 11, 2012 Popular Post Share Posted December 11, 2012 Thought they were registered aleady!? > AE, MC, Citi, Capital One, Visa,,, and the rest These Loan Sharks mail me Usury Cards all the time. 4 Link to comment Share on other sites More sharing options...
fareastguy Posted December 11, 2012 Share Posted December 11, 2012 If the "high street loan sharks" actually made loans affordable to those that needed it the most then the "underground" variety of bottom feeders would dry up & disappear. 2 Link to comment Share on other sites More sharing options...
delgarcon Posted December 11, 2012 Share Posted December 11, 2012 (edited) If the interest rates were capped, the registered loan sharks would be little better than the banks and not lend without security. What the authorities SHOULD do is enforce the law and bring the sharks to book. I have first hand experience at trying to help someone get out of the clutches of one of these people and was even told by a solicitor that there wasn't much that could be done. And before any of the idiots condemn the borrower, the money was borrowed to pay the father's hospital bill. which is another thing that disgusts me about this country, the absence of a proper welfare system for Thais. This is truly the asshol_e of the world! Edited December 11, 2012 by delgarcon Link to comment Share on other sites More sharing options...
OzMick Posted December 11, 2012 Share Posted December 11, 2012 At least the authorities are looking at it. As usual they are damned if they do or damned if they don't on Thaivisa. While they only look at it, yes. Now, if they were actually to DO something...............besides making inane suggestions that is. If they were to pass legislation making it much easier to convict, and cancelling all debts owed to a person charging interest rates above a set amount, would anybody on TVF complain? Besides yourself, that is. Link to comment Share on other sites More sharing options...
alstaxi Posted December 11, 2012 Share Posted December 11, 2012 Drug dealers and hit men should get in on this hair brained scheme, another win win situation, good grief who dreams this shit up. 1 Link to comment Share on other sites More sharing options...
meatboy Posted December 11, 2012 Share Posted December 11, 2012 somchai forgot to include the banks as well. Link to comment Share on other sites More sharing options...
simple1 Posted December 11, 2012 Share Posted December 11, 2012 If the interest rates were capped, the registered loan sharks would be little better than the banks and not lend without security. What the authorities SHOULD do is enforce the law and bring the sharks to book. I have first hand experience at trying to help someone get out of the clutches of one of these people and was even told by a solicitor that there wasn't much that could be done. And before any of the idiots condemn the borrower, the money was borrowed to pay the father's hospital bill. which is another thing that disgusts me about this country, the absence of a proper welfare system for Thais. This is truly the asshol_e of the world! Off topic, but it's worth commenting on your last sentence. Many Thais work in the cash economy & do not pay tax. Putting aside corruption, it's no wonder that Thailand doesn't have a well funded welfare system. There is access to government hospitals, but some Thai's, at least in my family, do not trust the level of care & will borrow money to obtain a better quality of care elsewhere. Elderly members of my Thai family get a pension, it's the grand sum of 600 baht a month from the government. However, they never paid into a pension scheme or paid any tax. Link to comment Share on other sites More sharing options...
delgarcon Posted December 11, 2012 Share Posted December 11, 2012 simple, I'm not suggesting that it should be free to all, what I deplore is that there is NO system in place. People knock the NHS in Britain, but at least you don't have to borrow money to get treatment. Link to comment Share on other sites More sharing options...
AleG Posted December 11, 2012 Share Posted December 11, 2012 Reminds me of when the Education Minister attempted to solve the problem of bribes being used to secure places at schools by making it a policy. Link to comment Share on other sites More sharing options...
delgarcon Posted December 11, 2012 Share Posted December 11, 2012 This is the problem isn't it simple? It seems that no government is capable of putting a system of taxation and welfare in place. Link to comment Share on other sites More sharing options...
technologybytes Posted December 11, 2012 Share Posted December 11, 2012 I thought that the whole point of being a "Loan Shark" is to be unregistered and to charge high interest rates. It's been happening the world over for thousands of years, it's not going to stop all the time there is a demand for fast easy credit. Link to comment Share on other sites More sharing options...
mowgus Posted December 11, 2012 Share Posted December 11, 2012 This'll never fly for two reasons. 1. if the loan sharks had to drop their crazy interest rates they'd call in their loans fast....where would the loanees come up with the funds? 2. chances are Somchai and the rest of the boys in power are making too much money with the current system to want to disturb it . Thailand has become a very materialistic must have a new car, must have a new iphone5, society...I never understood how people making 7000 baht a month can buy so much crap. It's the typical Thai attitude of not looking past today. By the way...what are the ramifications in Thailand for defaulting on (bank) loans? 37.8% seems insane! 1 Link to comment Share on other sites More sharing options...
sangfroid Posted December 11, 2012 Share Posted December 11, 2012 I thought that the whole point of being a "Loan Shark" is to be unregistered and to charge high interest rates. It's been happening the world over for thousands of years, it's not going to stop all the time there is a demand for fast easy credit. Exactly.... That's why it is called ngun nork rabob เงินนอกระบบ "Money outside the system" They can charge huge usurious interest rates with impunity. Why would they want to be registered? Link to comment Share on other sites More sharing options...
abhaya Posted December 11, 2012 Share Posted December 11, 2012 I have relatives who do this, interest is 20% in which the borrowers have a year to pay it off, they put up their chanotes as collateral , and they have not booted anyone off there land (yet). Not the best of all possible worlds but a viable alternative to banks who will not give out fast- long term loans. I would like to see a Grameen style of micro financing in Thailand as a lot of poor farmers need quick money to fix a tractor or buy seed etc. Of course there will always be unsavory loan sharks that cater to people who have gambling debts etc, but as they say “eat your cookies in bed and you’ll sleep with crumbs”. Link to comment Share on other sites More sharing options...
rotary Posted December 11, 2012 Share Posted December 11, 2012 (edited) Not sure what they can do to stop this loan shark stuff. I think registering will not work. I know of one family that the loan sharks got the house and car because the wife borrowed money, told no one, and let the interest amount owed become worth more than the value of the property by far. The husband took the kids as they were older than 15, run her off and now she works in Pattaya as she should. Edited December 11, 2012 by rotary 2 Link to comment Share on other sites More sharing options...
RisqEM Posted December 11, 2012 Share Posted December 11, 2012 Shows how inept this government really is. Legalize mafia activity. The USA never legalized loan sharks. There is a private lending industry which is regulated far beyond anything that Thailand is even capable of doing. PTP just wants their grubby little hands in another honey pot, and they don't care how legal or illegal it is. Using half truths, lies, ignorance, and fear mongering is what they're good at. 1 Link to comment Share on other sites More sharing options...
technologybytes Posted December 11, 2012 Share Posted December 11, 2012 (edited) The problem with being a lender is that you have to ensure the borrower has: A) The ability to pay, and B ) The motivation to pay. Typically loan sharks care less about the former and more about the latter which is kind of the opposite of proper banks. Loan sharks need to be seen to collect on outstanding debts or their business will turn into a charity. Because loan sharks take a increased risk compared to banks, they need to charge a higher rate, and no doubt they occasionally need to grease the palms of the local police in the event of collection methods turning nasty. Whilst the idea of loan sharks may be distasteful to some, they provide a service in circumstances that no "proper" financial institution ever can and therefore are a public service in some respects. We already have "licenced loan sharks" they are called banks! As soon as they are licensed and have to conform to rules and regulations they cease to be real loan sharks and they can't provide the service that they used to ! Edited December 11, 2012 by technologybytes Link to comment Share on other sites More sharing options...
delgarcon Posted December 11, 2012 Share Posted December 11, 2012 A public service, are you serious? Link to comment Share on other sites More sharing options...
Tatsujin Posted December 11, 2012 Share Posted December 11, 2012 Rising household debt is not a concern, Somchai said, as it has not yet reached a critical level. Outstanding consumer loans surged 20.4 per cent year on year to Bt2.75 trillion while defaults on personal loans jumped by 37.8 per cent and on credit cards by 11.1 per cent. Hey Somchai, When will you become concerned? After defaults have reached a critical level? Great plan! "Money for nothin and checks for free" Dire Straits. An easily solvable problem BY NOT BORROWING MONEY FOR THINGS YOU DON'T NEED (new iphone, new car, new house etc). 1 Link to comment Share on other sites More sharing options...
MaxLee Posted December 11, 2012 Share Posted December 11, 2012 More loan sharks, more corruption, less control in the debt system,... and even murder could be involved Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now