The Government Savings Bank's (GSB) non-bank subsidiary is expected to start operation in the second half of next year, says GSB president Vitai Ratanakorn.
He said the bank is setting up the subsidiary to compete in the non-bank segment, with personal loans among its offerings.
The subsidiary is expected to have registered capital of 300-500 million baht, Mr Vitai said.
"We're also seeking a partner to jointly invest in this non-bank business," he said.
The new entity aims to serve individuals who cannot access financial institution loans and thus have to depend on high-interest loan sharks.
GSB has not granted loans to this high-risk consumer group, said Mr Vitai. If the bank did lend to this group, it would have to charge a high interest rate, he said.
Under the relevant law, GSB's interest rate is limited to a maximum of 15% per year.
The bank has determined it is not worth the risk to lend to high-risk borrowers at this interest rate, said Mr Vitai.
Non-bank businesses are allowed to legally charge a maximum interest rate of 36%.
He said the new non-bank subsidiary is expected to charge an interest rate of 20-22% per year.
GSB has no intention to compete in the pico-finance or nano-finance segments, said Mr Vitai.
The bank wants to help those people who cannot access bank loans because this is a large segment, he said.
Mr Vitai said GSB executives approved the plan to set up a non-bank subsidiary, which is required to apply for licences from the Bank of Thailand to offer personal and digital loans.
