BOT eyes decree on leasing, hire-purchase sector in bid to control informal lending sector

Suwannee Jatsadasak, BOT’s senior director, said the draft royal decree under the 2008 Financial Institution Business Act is being created to protect people, especially those buying cars or motorcycles under long-term leasing or hire-purchase deals.

She said the decree will focus on supervising non-banking facilities and dealers’ market conduct and macro-prudential regulations to ensure household debts in Thailand do not get out of hand.

She said that since the leasing and hire-purchase sector was rising by about 5.5 per cent per year, complaints against these businesses will likely increase.

“BOT is currently talking with the Consumer Protection Board about the option of supervising fees and interest rates applied in the leasing and hire purchase sectors,” she said.

Meanwhile, Thailand Motorcycle Hire Purchase Association president Mongkol Peanpitakkit complained many non-banking entities and dealers do not understand some details of the draft royal decree.

“They don’t understand some details, such as what they are expected to do with market conduct,” he said.

Mongkol, who is also managing director of T-Leasing, expects the leasing and hire-purchase of motorcycles to grow in the fourth quarter of this year, thanks to the recovery in the economy and production capacity.

He added that T-Leasing was maintaining its growth target of 25 per cent.

A source from the motorcycle leasing and hire-purchase sector said the decree will focus more on dealing with informal lenders as they have not been under official supervision yet.

The source also expects BOT to require that informal lenders register their business in the future.