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01 February, 2010

 

New Thai microfinance regulations worrying for the burgeoning industry


January 28,2010

Much anticipated regulatory changes in Thailand have resulted in dismay within the local microfinance sector and continue a long-established pattern of disappointing policy-making in the country. The new laws have created new requirements for obtaining microfinance licences. For the next three years, only local banks will be given licenses. The Bank of Thailand has informed some MFIs that they will not qualify for licenses as they are not working on a national level.

In addition, the government is initiating a 6,000 million baht ($180 million USD) microfinance program in April 2010. They will be using the same village banking methodology as most of the current MFIs (including BWTP members Common Interest and Plan) and will offer subsidised interest rates as low as 9%. The government program therefore threatens the viability of some long-established and successful institutions.

In a blow to the burgeoning sector, the Thai Minister of Finance has also stated that he wants all existing lending programs to merge with the newly established government program in order to streamline and make the system more efficient. Initial discussions have already started among some of the MFIs.

The move will further setback efforts to increase microfinance investment in the region and harks back to the populist policies of the Thaksin government which included subsidised credit to farmers and product promotion through the OTOP-program (One Town One Product).

The BWTP Network will soon publish a Microfinance Industry Report: Thailand which outlines the history of microfinance efforts in the country and outlines recommendation which have disappointingly not been heeded within the current laws.

For more information and updates on developments visit: http://www.microfinancethailand.com/.

SOURCE: Banking with the Poor Network



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