Bangkok--17 Jun--Bangkok PR
Programme offers self-employed, non-payslip low income earners access to the banking system to cut their unproductive interest expenses and free them from loan sharks if they show they have ‘repayment’ discipline
Waiters, hairdressers, noodle stand vendors, stallholders and street vendors, who are self-employed or earn non-payslip income currently pay up to 20% interest per day to money lenders for personal loans — equivalent to 600% per month!
Loan applicants must deposit Bht100 for 100 days to qualify for a Bht 100,000 loan, with repayment in two years of Bht 200 per day
“I believe that if you give low income people an honourable choice, to earn their own money by giving them access to the resources that all of us have (and take for granted) here in this room, that they will, for the most part, much prefer to take the honourable option to grow their own incomes rather than accept insulting handouts…
“And when that happens, when we become a nation of people focused on honestly growing our own incomes — rather than waiting for someone to give us something, or stealing from our children’s future through populist policies — then that is when our country’s economy will take off and everyone will become truly wealthier. Like it did in Taiwan. Like it is doing in Korea.” — Mr. Pradit Phataraprasit
The Chart Thai Pattana Party, today (Thursday, 16th June), unveiled a programme called ‘100 Baht / 100 Days’ aimed at helping the self-employed and low income earners free themselves from exploitation by underground lenders, who charge interest of up to 20% per day, by drawing borrowers into the banking system and building a credit history for them so that they can also be served by the private sector.
Mr. Pradit Phataraprasit, a leading member of the Chart Thai Pattana Party, said that under his Party’s 100 Baht / 100 Days programme people who can show that they have an income, a regular occupation, and the discipline to keep their promises to make regular payments will qualify for up to Bht 100,000 in personal loans, even if they do not have the salary slips traditionally required for loans provided by banks or by credit card issuers.
“The lack of a payslip is a serious obstacle to borrowing for the self-employed or those who earn much of their income informally, like waiters, hairdressers, spa masseuses, street vendors, market stallholders, noodle-stand vendors, tuk-tuk drivers, taxi drivers, motorcycle taxi drivers, hair dressers, and countless other small service providers,” he said.
According to Mr. Pradit, under the 100 Baht / 100 Days system, potential borrowers are required to deposit 100 baht for 100 days in a designated account, and, at the end of 100 days they will qualify for a 100,000 baht loan. The loan will then be paid off by the borrower paying 200 baht a day for the following two years.
“It’s that simple. Have the discipline to save Bht 100 for 100 days, regularly, and we will get you into the banking system so that you can enjoy the benefits that virtually every other citizen with a regular income already enjoys — that of access to fairly priced credit,” said Mr. Pradit.
He added, “But you won’t get a loan if you have no job and no income, or no discipline in keeping your regular payment promises. We’re not handing out money. We are giving it only to working people who are already earning an honest living and who can afford to pay back, but just can’t prove it through salary records.”
Borrowers are also offered the option of smaller loans.
“If you want to borrow Bht 50,000 then you are required to deposit only 50 baht for 100 days, and you can pay off your debt over the next two years by paying 100 baht a day,” he said.
“The beauty of this system is that it REWARDS THE GOOD PEOPLE. People who stick to the programme and regularly deposit their 200 baht a day during their LOAN REPAYMENT period will develop a documented credit record with the bank. That credit record will then make them into very attractive customers for all banks, including commercial banks. It will successfully bring these people into the formal banking system and cut the largest single expense in their lives — interest payments to loan sharks — thereby also helping them to control the escalating cost of living in an enduring way.
“Currently, these people are compelled to borrow from loan sharks whenever confronted with unexpected fluctuations in income or expense — a job routinely done by credit cards for salaried employees or wealthier people,” said Mr. Pradit.
“Any unexpected development that curtails their daily income, or any unexpected surge in expense such as tending to a sick parent, or the opening of a new school term, or a funeral, has a devastating effect on their lives because it forces them into the hands of vicious usurers who cripple honest income earners with interest rates of up to 600% per month, and with interest collected daily,” he said.
“If it rains for a week and slows the sales of a street stallholder, or a tuk-tuk driver falls sick for a week, not only does their income disappear, but the money they borrow to survive during that period drives them into even greater debt, because of the astronomical interest rates,” Mr. Pradit added.
He said that most low-income, self-employed people are compelled to pay over 200 times more in interest for the same amount of loan as a salaried employee with a credit card even though they may be earning less.
“It’s a terrible poverty trap that catches them between the twin jaws of declining income and increasing costs, often through no fault of their own. We hope to prise open the jaws of that trap for countless, hard-working, self-employed people through the 100 Baht / 100 Days programme,” said Mr. Pradit.
Mr. Pradit cited the example of a sick noodle vendor who is unable to work and earn a living for a week, and who has to borrow Bht 3,000 for a month, which can create interest obligations of Bht 9,000 a month, depleting a huge portion of her monthly income.
“The poor noodle vendor not only suffers from losing her income for every day she doesn’t work, but on top, she has to pay interest for her loan that’s over 200 times greater than what a normal credit card holder would pay to borrow the same amount to solve an unexpected expense. She gets squeezed from both ends — less income, and hugely more expenses. So how can we ever expect these people to become better off?” he asked.
He said that state banks would pioneer the programme.
Additionally, he said that multiple repayment points would be set up at markets and that mobile units would also be deployed to make depositing daily repayments easy. He said that he would also invite petrol stations and convenience stores to become repayment points.