Bangkok Post – Geographical reach of pico-finance businesses to be expanded

The Finance Ministry is in the process of revising its ministerial announcement to expand the geographical scope of the pico-finance business to better serve small-scale borrowers and draw informal lenders into the formal financial system.

According to Deputy Finance Minister Paopoom Rojanasakul, the ministry is considering expanding the geographical scope of provincial-level supervised micro-lending businesses (pico-finance) from being limited to operations solely within a licensed province to also allowing operations in adjacent provinces.

As for the criteria and conditions, the expansion of the service area for pico-finance lending applies to operators classified as “Pico Plus” who have a paid-up registered capital or shareholder equity of no less than 10 million baht.

These operators will be allowed to conduct pico-finance business both within their licensed province and in adjacent provinces, and may provide loans of up to 100,000 baht per borrower.

Operators wishing to expand their service area must have a business plan and a risk management plan covering various aspects — such as customer identity verification, loan disbursement and repayment processes, debt collection and recovery methods, and credit approval criteria — to ensure effective debt follow-up and collection.

This revision of regulations and conditions for operating pico-finance businesses aims to improve convenience, reduce travel time and enhance access to formal financial sources for small-scale borrowers.

It will also allow businesses to expand their customer base into neighbouring provinces and encourage informal lenders to operate legally under the supervision of the Finance Ministry. This effort aligns with the government’s policy that places high importance on addressing informal debt issues.

Currently, the Finance Ministry is in the process of updating the relevant ministerial and Fiscal Policy Office announcements.

Public hearings and consultations with stakeholders will be held before the proposals are submitted to the Minister of Finance for approval, according to Mr Paopoom.

The pico-finance scheme was initiated by the Finance Ministry in 2017, aiming to expand access to the financial system for underserved individuals, allowing them to obtain loans at fair interest rates and reduce reliance on informal lenders.

Pico-finance operators also serve as a mechanism that encourages informal lenders to transition to legally operating loan services within the formal financial system.