23 September, 2009
Microfinance is Key to Master Plan: BOT
Microfinance is one of the key banking services the Bank of Thailand (BOT) plans to promote aggressively in its implementation of the secondphase master plan (2009-2013).
It would relax some regulaฌtions to attract commercial banks or new players to do the business.
The microfinance business would bring about not only financial access of low income people but also narrow national income gap. Many countries succeeding in the business have experienced in income distribuฌtion improvement.
The BOT survey found that 10 per cent of the Kingdom's household sector and small and medium sized enterprises (SMEs) could not access to the financial services.
"We want commercial banks to give loans to all kinds of peoฌple - both of high end and low end people in terms of income. Only medium and high income people can currently access to loans but low income and a very low income people can not be accessible to the service," said Bandid Nijathaworn, deputy governor.
Actually, some organisations such as cooperatives have already done the microfinance business. But they have limited types of business, inadequate liquidity and minimal business scale.
Commercial banks have high capital, but not enough customer information. So doing the microfinance business could cause credit risk in portfolio.
"The banks do not know how the customers are, but have the liquidity. The cooperatives know their members, but have only members' savings. So we try to find the way to tie them," said Bandid.
In the financial master plan, the central bank wants to connect the current banking system with the low income people via that are already in the business such as the cooperatives and funds. The connection would encourage the banks to do the microfinance business easier.
Bandid said the central bank would partly relax its regulation in a bid to attract the banks to jump into the market. The relax ation has to be under sound risk management system with international best practice.
According to the financial master plan, running the microฌfinance business could be done in three methods.
First, it would allow new domestic or foreign players who are expert in micro finance to do the business is a way to fill the gap in the banking system.
"We want new players to do business in the Kingdom in a bid to bring about valueadded in the industry," said the deputy governor.
Second, commercial banks would be allowed to establish affiliate companies to do microfinance business.
Third, the banks would be allowed to do the business with the third party such as cooperative which have known the customers well. The third party could be debt collectors or lending officers.
Bandid said the central bank would encourage the infrastructure development to faciliate the business - such as information system and technology.
The proper infrastructure would help reduce operating cost as the operators would have enough information to make business decision. This would result in low lending interest rates while debtors would have more choices to choose the products.
"If we do nothing, there will be a sector that can not access to the service," said Bandid.
By Anoma Srisukkasem
The Nation
Published on September 15, 2009
It would relax some regulaฌtions to attract commercial banks or new players to do the business.
The microfinance business would bring about not only financial access of low income people but also narrow national income gap. Many countries succeeding in the business have experienced in income distribuฌtion improvement.
The BOT survey found that 10 per cent of the Kingdom's household sector and small and medium sized enterprises (SMEs) could not access to the financial services.
"We want commercial banks to give loans to all kinds of peoฌple - both of high end and low end people in terms of income. Only medium and high income people can currently access to loans but low income and a very low income people can not be accessible to the service," said Bandid Nijathaworn, deputy governor.
Actually, some organisations such as cooperatives have already done the microfinance business. But they have limited types of business, inadequate liquidity and minimal business scale.
Commercial banks have high capital, but not enough customer information. So doing the microfinance business could cause credit risk in portfolio.
"The banks do not know how the customers are, but have the liquidity. The cooperatives know their members, but have only members' savings. So we try to find the way to tie them," said Bandid.
In the financial master plan, the central bank wants to connect the current banking system with the low income people via that are already in the business such as the cooperatives and funds. The connection would encourage the banks to do the microfinance business easier.
Bandid said the central bank would partly relax its regulation in a bid to attract the banks to jump into the market. The relax ation has to be under sound risk management system with international best practice.
According to the financial master plan, running the microฌfinance business could be done in three methods.
First, it would allow new domestic or foreign players who are expert in micro finance to do the business is a way to fill the gap in the banking system.
"We want new players to do business in the Kingdom in a bid to bring about valueadded in the industry," said the deputy governor.
Second, commercial banks would be allowed to establish affiliate companies to do microfinance business.
Third, the banks would be allowed to do the business with the third party such as cooperative which have known the customers well. The third party could be debt collectors or lending officers.
Bandid said the central bank would encourage the infrastructure development to faciliate the business - such as information system and technology.
The proper infrastructure would help reduce operating cost as the operators would have enough information to make business decision. This would result in low lending interest rates while debtors would have more choices to choose the products.
"If we do nothing, there will be a sector that can not access to the service," said Bandid.
By Anoma Srisukkasem
The Nation
Published on September 15, 2009
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