The Bank of Thailand has approved the 'Digital Personal Loan' scheme, allowing loans of up to 20,000 Baht with an interest rate, including fees, capped at 25%. This initiative enables banks to use payment data for utilities, phone bills, and online shopping as part of their loan assessment process, facilitating easier access to financing for freelancers.

Mr. Veerathai Santiprabhob, Governor of the Bank of Thailand, stated that the bank has established guidelines, methods, and conditions for conducting digital personal loan businesses. This type of loan will utilize alternative data such as utility payments, income, or online purchasing behavior to assess borrowers' ability and willingness to repay.

The Bank of Thailand has set a limit for digital personal loans at 20,000 Baht per consumer, with repayment terms not exceeding six months. There are no restrictions on the purpose of the loan, and the total interest, penalties, service charges, and fees must not exceed 25% per year.

This digital personal loan initiative aims to help individuals, particularly those without a regular income, those who cannot prove their income, and those without assets to use as collateral, gain better access to credit. At the same time, businesses can leverage digital technology and various alternative data sources to enhance their services, reducing costs and improving operational efficiency. Additionally, it will help create a digital footprint in the financial system for citizens, which will be beneficial for accessing other financial services in the future.

Mr. Chali Asavathiratham, Senior Executive Vice President and CEO of the Data Division at Siam Commercial Bank, mentioned that the guidelines for digital personal loans from the Bank of Thailand have prompted the bank to study and prepare its technology capabilities. Currently, the bank has the potential and capacity to analyze customer data from various dimensions and in-depth, which will enhance the efficiency of loan approval processes.

The target customer group focuses on existing retail clients, and the bank expects to have approximately 70 billion Baht in digital lending by the end of 2020. However, this will depend on closely monitoring the economic situation and consumer spending trends.

Mr. Thawilap Rittaphirom, Assistant Managing Director of Bangkok Bank Public Company Limited (BBL), expressed confidence that the digital personal loan initiative will enhance public access to financial services, providing various benefits. It will also encourage banks to utilize non-financial data in their loan assessments moving forward, thereby elevating the standards of lending practices.

Mr. Amorn Suwatchittanan, Assistant Managing Director of Kasikorn Bank, believes that offering digital personal loans is beneficial for borrowers, especially those with irregular incomes who find it difficult to prove their earnings. This opens opportunities for banks to consider a wider range of data in their assessments, supporting an increase in digital lending, as current lending practices primarily rely on financial data and transaction history through financial institutions. Therefore, banks must also explore lending in this manner in the future.

SOURCE : www.bangkokbiznews.com