Translated from bangkokbiznews.com

Mr. Bandit Nitthavorn, Bank of Thailand (BOT)’s Deputy Governor of Financial Stability Department, stated that the purpose of BOT encouraging Microfinance transaction is to close gap of accessing the loan transaction of minor group among less-income persons or grass-root level who currently cannot access to loan transactions in financial institutions. Currently, Ministry of Finance (MOF) is still considering microfinance for grass-root people to be conducted from the 3 of following methods;

A. Give an permission to experienced foreign investors to start microfinance activities;

B. Allow commercial banks to partner with third party microfinance experts and foreign investors;

C. Allow commercial banks to operate microfinance programs. However, this business will be separated from the commercial banks main activities such as the establishment of a subsidiary.

“Microfinance business is totally different from business transaction which is not done by financial institutions (Non-bank) that provide various financial services or Bank for Agriculture and Agricultural Cooperatives (BAAC). Recently, Government Savings Bank which had provided Microfinance business must focus on less-income minor groups who reside in remote rural area and cannot access to loan transaction of financial institutions’ system. Currently, this project is still being considered by Ministry of Finance which will take time for a while.” said Bandit.

Mr. Krirk Vanikkul, (BOT)’s Assistant Governor revealed that the Microfinance “Master Plan” is in Phase 2 and currently cannot be fully disclosed because BOT and MOF are still carefully considering which methods are most suitable for Thailand. More importantly, the MOF wants to ensure that the new rules will not cause any negative effects on society.

Moreover, the MOF has to consider whether any conditions or factors proposed in the Microfinance plan will affect the whole financial system. Microfinance must be carried out to meet the needs of targeted group who do not have access to financial services and to those who must rely on informal debt which results in higher interest rate.