BoT readies peer-to-peer lending service

The Bank of Thailand plans to set regulations for peer-to-peer (P2P) lending service by the year-end, widening opportunities for small-business operators to access financial sources.

The central bank expects to set out regulations to cover all related parties, including P2P lending platforms, borrowers and lenders, said assistant governor Ruechukorn Siriyothin.

The Bank of Thailand and the Securities and Exchange Commission are working out details about regulations governing the lending platform operators.

The central bank will take responsibility for retail borrowers, while the securities watchdog will take charge of transactions involving high-net-worth investors.

P2P lending directly connects borrowers with individual lenders, bypassing banks through online platforms.

The Finance Ministry has announced the initial qualifications for P2P lending platforms, stipulating that they must have a minimum registered capital of 5 million baht and 75% of their stake must be held by Thais.

The P2P lending platform matches lenders with borrowers through online services.

Each borrower is eligible to seek a maximum credit line through P2P lending service at 50 million baht per loan project.

Each individual lender is capped at 500,000 baht a year, while companies who are able to analyse risk can extend loans without limitation.

“The maximum credit line for an individual lender is set at 500,000 baht because the loan service focuses mainly on small-sized enterprises or self-employed business owners,” Mrs Ruechukorn said. “The cloud lending will widen opportunities to access funding sources with more convenience, as the service doesn’t need a complicated process or documents for the loan application.”

P2P lending platform providers that want to operate such a business have to test out the system in the central bank’s regulatory sandbox beforehand.

The central bank will propose that the Finance Ministry provide operating licences to those that are considered ready to provide such service.

Financial institutions, on the other hand, need not seek a lending licence.

The platform service providers must set up credit scoring, debt collection and a risk management system to control lending risk. The platform also needs to appoint an escrow agent as the third party for financial management on the digital platform.

Fees charged on the platform will be set by central bank, which has promised competitive rates.

Mrs Ruechukorn said the central bank set a ceiling interest rate for P2P lending of 15% a year, but the rate charged depends on negotiations between lenders and borrowers based on the risk profile of a borrower and the project feasibility under the credit scoring system.

The central bank will also take charge in protecting consumers, while debt collection and contract breaching will apply existing laws.

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