The government yesterday gave approval to two state banks to extend a total of 10 billion baht emergency loans to low income earners in its effort to solve the longstanding unofficial or unregulated loans problem encouraging the poor.
Under the approval by the cabinet, the Government Savings Bank and the Bank for Agriculture and Agricultural Cooperatives will each provide 5 billion baht emergency loans to about 200,000 low income earners and farmers.
Low income earner and farmer will be given loan not exceeding 50,000 baht per person.
Nattaphon Chatusri-Phitak, the special advisor attached to the Prime Minister's Office, stated that the emergency loan scheme was approved in order to allow the poor � who are mostly comprised of farmers � greater access to financial resources in the event of emergencies.
Besides, he said this will also allow authorities to eradicate unofficial or unregulated loans which has been a longstanding problem plaguing the country.
According to him, these loans are meant to provide emergency funds and applicants are forbidden from taking out these loans and then refinance the funds.
A static interests of 0.85% per month will be charge which amounts to 10% per year. Furthermore, either a guarantor or collateral must be provided in order to qualify. It is expected that no less than 200,000 poor people will be able to benefit from the program and applications can be made starting from today.
This latest action by the government follows on earlier measures that were implemented to address the problematic unofficial or unregulated loans problem. The government had already announced new laws forbidding aggressive debt collection practices and the charging of exorbitant interest rates.
Two year imprisonment and a maximum fine of 200,000 baht will be meted out to anyone refusing to comply.
Other programs such as the introduction of micro-finance and pico-finance and debt composition have also been approved in order to help very poor people who are deep in debt with these unscrupulous loan providers.
Source: Thai Public Broadcasting Service (Thai PBS)