Banks not interested in solving informal debt

BANGKOK, 19 March 2010 (NNT) – The Bank of Thailand (BoT) has admitted that the majority of commercial banks have no interest in approving loans for grassroots projects in order to help solve informal debt problems.

BoT Deputy Governor for Financial Institutions Stability, Krirk Vanikkul stated that there was a low possibility that commercial banks will help solve informal debt problems among the grassroots population.

Currently, financial assistance given to low-income communities is via saving cooperatives. However, commercial banks have to face higher risks and will have higher costs in operation, which will not be worth the return from the interest rate. According to the BoT, state-owned banks who have been tasked by the Ministry of Finance will play a main role in offering assistance to low-income loan seekers.

The BoT has an initiative to encourage and support commercial banks in approving more loans for people in rural areas and low-income earners. The program aims to help solve informal debt problems so that debtors can seek financial assistance from banks instead of loan sharks.