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FinTechs belonging to this category act as a loan creditor (even short and very short-term loans), are broking loans or receivables or conduct factoring of loans, which were given to private or business customers. In this business area you also find “peer-to-peer” (P2P) services, in which FinTechs enable a multitude of users to give loans (and brokered by the FinTech-platform) to other users or companies.
Finetrading is hereby a financial service of FinTechs, where they buy due receivables and grant the debtor an extension of payment time.
As an ancillary service some FinTechs offer alternative credit assessment services to check the solvency of a borrower.
Introduction
Attitude of the country towards loan-giving-, factoring-, brokerage-, finetrading- and ancillary services
According to a BOT report from the fourth quarter of 2021, the demand for loans has increased while the standard for giving out loans remains the same for business customers. As for private customers, the demand for loans is progressively rising, and financial institutions are likewise progressively relaxing the standard for providing loans. This demand is a result of the pandemic, during which loans became an essential working capital for both private and business customers.
Legal affairs
Obligations and requirements to provide loan-giving-, factoring-, brokerage-, finetrading, and ancillary services described above
There are two (2) groups of service providers that require licenses: commercial banks licensed under the Financial Institutions Businesses Act B.E. 2551, as amended, and non-bank service providers licensed under the relevant notifications of the Ministry of Finance. No license fee is charged for any of the licenses.
Non-bank service providers are required to seek licenses for three (3) types of loan businesses regulated by the BOT:
a. Personal Loan under Supervision (P-Loan):
A personal loan under supervision refers to personal loans without assets or properties as collateral, which include loans originated from hire-purchase and lease of goods that operators do not sell in the ordinary course of business, except for vehicles and machines, as well as “title loans”. Personal loans under supervision exclude loans for education, traveling to overseas employment, medical treatment, natural persons abroad, and employee benefits, as well as loans that have documents for land rights or documents for use of land rights, buildings, properties, or other assets as collateral.
For the purposes of supervision of personal loan business, a “title loan” refers to a loan for a person holding legal rights to a vehicle, whereby business operators receive vehicle registration records or arrange to have a contract or document for transferring the vehicle registration in advance as a debt guarantee. This includes arrangements to have a contract or document that allows operators to sell or take any other action with a debtors’ vehicle for debt repayment, while debtors may continue to keep and use the vehicle as normal owners.
Currently, the maximum total interest, fines, services fees, and charges for non-title loans is set at 25% per year (effective rate), while the maximum for title loans is 24% per year (effective rate).
The credit limit for loans is now calculated on the information-based lending approach, depending on the type of loans, as prescribed in the BOT Notification regarding Personal Loans under Supervision.
b. Retail Loan for Occupations under Supervision (Nano Finance):
Nano Finance is for the purpose of business undertakings that have a maximum total credit line for each debtor of THB 100,000, (approx. USD 2,925) and credit terms as agreed