The Government Savings Bank (GSB) is aiming to enter and compete in the non-bank lending sector by setting up a sister company to better serve those on low incomes.
The new subsidiary is needed to improve flexibility in the bank's offering of personal loans in the non-bank sector which are intended mainly for low-income earners with otherwise limited access to sources of funds, said GSB president Vitai Ratanakorn on Monday.
GSB's subsidiary will be offering loans at interest rates lower than those offered by all other non-bank lenders, he said.
"GSB is now still in the process of applying for a non-bank business licence from the Bank of Thailand and expects to win approval late next year,'' he said.
While waiting for the licence, GSB will next roll out a new product designed for those on low incomes who currently struggle to secure loans, he said.
GSB has set aside between 1 and 2 billion baht to offer in personal loans to more than 100,000 such people, he said, adding that more money will be added to the programme later if necessary.
"Each customer may apply for a loan of between 10,000 and 30,000 baht at an interest rate of 1.25% per month for the maximum repayment period of two years," he said.
"As the name Digital Lending suggests, the new loan scheme will be administered entirely online, from initial application to its repayment in instalments,'' he said.
Interested parties will soon be allowed to submit their requests for this type of personal loan via GSB's MyMo mobile banking app, he said.
The bank won't charge any loan fees and will analyse their applications based on their financial transaction history rather just their income, which is usually the key component of credit scoring, he said.
The sums will be transferred to the customer's bank account when his or her application is approved, he said.
The main reason many grassroots businesses and individuals turn to loan sharks is because they do not have proper access to the personal loans offered by most banks, he said.
