The Bank of Thailand is proposing an amendment to the Credit Information Business Act of 2002 to attract business operators to become intermediaries in providing loans.
The move aims to reduce the risk and cost of the loan intermediary business, said a Finance Ministry source who requested anonymity.
The loan intermediary business that operates peer-to-peer (P2P) lending under the Bank of Thailand’s supervision and debt crowdfunding under the Securities and Exchange Commission’s oversight are alternative sources of fundraising platforms for small and medium-sized enterprises.
Many SMEs have difficulty accessing loans from traditional financial institutions, according to the source.
Since these are new businesses that emerged in the digital era, loan intermediary businesses find they cannot become members of a credit information company, as the Credit Information Business Act of 2002 does not address them, the source said.
The act allows nine types of financial institutions to become members of a credit information company such as commercial banks, finance companies and life insurance companies.
Since loan intermediary businesses cannot become members of a credit information company, they lack critical financial information of borrowers, resulting in a lack of complete risk analysis.
This causes these businesses to shoulder a higher cost and affect parties wanting loan intermediary businesses to become intermediaries in providing credit, the source said.
The problem lies not only at the individual level, but also affects the efficiency and stability of Thailand’s credit system, the source said.
People who do not qualify for bank loans could face difficulty obtaining loans from intermediaries, since they lack necessary information for credit analysis.
The source said an amendment to the law would enable loan intermediaries to become members of a credit information company on a voluntary basis.
Such an amendment would also align with the government’s economic reform plan to provide greater access to traditional loan sources and new loan sources such as P2P lending and debt crowdfunding.
For instance, intermediaries in China have been providing digital loans via P2P and the regulator has established a system to collect credit information from non-bank companies.