Government Savings Bank (GSB) is joining with Dhipaya Group Holdings and Bangchak Corporation to set up a lending joint venture using land titles as collateral.
GSB president Vitai Ratanakorn said the venture dubbed "Mee Tee, Mee Ngern" (land for loan) is expected to lend up to 10-20 billion baht per year.
The three partners signed a memorandum of understanding yesterday for the joint venture, which aims to allow small and medium-sized enterprises and individuals to better access loans at a lower cost.
The venture has registered capital of 1 billion baht. GSB holds the majority share of 49%, while Dhipaya holds 31% and Bangchak holds 20%.
The venture is expected to be established and provide services in the third quarter this year, he said.
The business involves lending to customers who place land as collateral, offering two types of conditions.
The first type is customers mortgage the land to the company. If customers fail to repay loans according to conditions, the venture will take legal action to seize the land.
For the second type, if customers default, the venture can seize the land without going through the legal process.
Mee Tee, Mee Ngern plans to debut by providing loans via the first type of condition with an interest rate of 7-9% in the initial phase, before adding the second condition later this year, said Mr Vitai.
The venture will apply for a non-bank licence next year to enter the personal loan segment, aiming to capitalise on the trio's vast network of branches nationwide to offer services, he said.
Mr Vitai said the venture would create complete competition in the market, which is expected to result in lower interest rates for loans.
Dhipaya chief executive Somporn Suebthawilkul said the company's entry into a lending venture is in line with its plan to diversify into other businesses from its core insurance segment.
