22 November, 2009
Thailand Post Could Be Microfinance Player
The Finance Ministry and Bank of Thailand see the potential of Thailand Post, which offers postal services, to become a player in microfinance, a key channel under financial industry reform.
Nov 14, 2009
"Thailand Post can partner with banks and do this business," said Bandid Nijathaworn, deputy central bank governor.
Microfinance is one of the key areas that phase II of the financial sector master plan approved by the Cabinet last week wants to promote so small businesses and low-income earners can gain access to financial services.
But the question is, who wants to enter such a business with its high risk and lack of background information on borrowers? Commercial banks do not do this business due to higher risk.
Thailand Post's advantage is that it has many service points throughout the country, Bandid said. However, this state-owned enterprise does not specialise in banking so if it wants to enter microfinance it has to tie up with financial institutions.
Finance officials also said Thailand Post and other new players could enter the business by applying for a licence from the ministry and central bank. The ministry wants to control informal lenders that often charge exorbitant interest rates. It also plans this month to launch a debt-refinancing programme for customers of underground lenders.
There are 1,177 post offices and 3,321 licensed post offices in the country.
Bandid thinks there is more room to expand microfinance since state-owned banks and several savings cooperatives have limited capacity for lending.
The Government Savings Bank (GSB) and the Bank for Agriculture and Agricultural Cooperatives already offer microcredit to small business, farmers and lower-income indi?viduals.
Vorapol Socatiyanurak, vice chairman of the National Economic and Social Advisory Council, said he had advocated Thailand Post to go into the microfinance business like Japan Post.
Japan Post, a government-owned corporation, has been running postal and package delivery, banking and life-insurance businesses. It is claimed to be largest holder of personal savings in Japan with about US$2 trillion (Bt66 trillion).
Thailand Post workers could be retrained to do microfinance, he said.
Thanong Bidaya, a former finance minister, said GSB's microfinance operation, known as the People's Bank scheme, was not yet fully successful.
"Operating costs and interest-rate charges are still high as well as non-performing loans," he said.
Grameen Bank in Bangladesh, a micro-lender, has proven more successful due to lower operating costs, higher rate of debt repayment and its own financial sustainability, he said.
Muhammad Yunus, the founder of Grameen Bank, was awarded the Noble peace prize for his ability to assist the poor to access credit.
Lersak Chuladesa, GSB president and CEO, said the bank would continue its People's Bank scheme, but would not need partners.
About 400,000 people have accessed this kind of loan, taking out an average Bt30,000-Bt50,000, he said. The interest rate is 0.5 per cent per month for loans up to Bt30,000 and 0.75 per cent for up to Bt100,000.
Source: The Nation
Nov 14, 2009
"Thailand Post can partner with banks and do this business," said Bandid Nijathaworn, deputy central bank governor.
Microfinance is one of the key areas that phase II of the financial sector master plan approved by the Cabinet last week wants to promote so small businesses and low-income earners can gain access to financial services.
But the question is, who wants to enter such a business with its high risk and lack of background information on borrowers? Commercial banks do not do this business due to higher risk.
Thailand Post's advantage is that it has many service points throughout the country, Bandid said. However, this state-owned enterprise does not specialise in banking so if it wants to enter microfinance it has to tie up with financial institutions.
Finance officials also said Thailand Post and other new players could enter the business by applying for a licence from the ministry and central bank. The ministry wants to control informal lenders that often charge exorbitant interest rates. It also plans this month to launch a debt-refinancing programme for customers of underground lenders.
There are 1,177 post offices and 3,321 licensed post offices in the country.
Bandid thinks there is more room to expand microfinance since state-owned banks and several savings cooperatives have limited capacity for lending.
The Government Savings Bank (GSB) and the Bank for Agriculture and Agricultural Cooperatives already offer microcredit to small business, farmers and lower-income indi?viduals.
Vorapol Socatiyanurak, vice chairman of the National Economic and Social Advisory Council, said he had advocated Thailand Post to go into the microfinance business like Japan Post.
Japan Post, a government-owned corporation, has been running postal and package delivery, banking and life-insurance businesses. It is claimed to be largest holder of personal savings in Japan with about US$2 trillion (Bt66 trillion).
Thailand Post workers could be retrained to do microfinance, he said.
Thanong Bidaya, a former finance minister, said GSB's microfinance operation, known as the People's Bank scheme, was not yet fully successful.
"Operating costs and interest-rate charges are still high as well as non-performing loans," he said.
Grameen Bank in Bangladesh, a micro-lender, has proven more successful due to lower operating costs, higher rate of debt repayment and its own financial sustainability, he said.
Muhammad Yunus, the founder of Grameen Bank, was awarded the Noble peace prize for his ability to assist the poor to access credit.
Lersak Chuladesa, GSB president and CEO, said the bank would continue its People's Bank scheme, but would not need partners.
About 400,000 people have accessed this kind of loan, taking out an average Bt30,000-Bt50,000, he said. The interest rate is 0.5 per cent per month for loans up to Bt30,000 and 0.75 per cent for up to Bt100,000.
Source: The Nation
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