As part of the government’s effort to aid the working poor, the Government Savings Bank (GSB) is planning to offer 5 billion baht in loans to those earning 15,000 baht or less per month.
GSB’s loans will have fewer installment payments and lower interest rates for the first year to refinance underground loans, says Chatchai Payuhanaveechai, chief executive and president of GSB.
The bank’s loan scheme hopes to reduce non-formal borrowing as part of the government’s effort to stop loan sharks. The Finance Ministry will use the Government Savings Bank and the Bank for Agriculture and Agricultural Cooperatives to help address the issue.
GSB’s board of directors will first review and approve the scheme before being submitted to the cabinet.
The reduced interest rates may benefit up to 100,000 people, while the initiative to reduce monthly payment burdens can help between 100,000 and 120,000 borrowers.
According to the Interior Ministry, between 1.2 million and 1.3 million people have taken out loans from loan sharks.
The GSB may call on the Finance Ministry to absorb some of the interest costs incurred from the scheme through the public service account.
In addition to the loan scheme, the GSB will launch a revolving credit product aimed at retail customers earning 15,000 baht or less per month.
Those who qualify for the product will have the chance to borrow up to 5 times their monthly salaries. A cap of 200,000 baht is in place.
The goal with the revolving credit scheme, like the loan scheme, is to help low income families avoid borrowing from loan sharks.