Mee Tee Mee Ngern, a Government Savings Bank (GSB) subsidiary, plans to offer its land collateral loan service nationwide in June this year, expanding from the 10 major provinces in which it operates at present, says chief executive Isara Wongrung.
The company extends loans by using land as collateral. During the first three months of the service's operation -- from January to March -- Mee Tee Mee Ngern extended a total of 1.04 billion baht in loans at an average of 2.89 million baht per borrower to its target groups of small and medium-sized enterprises and small merchants.
Mr Isara expects 3 billion baht in loans to be extended in the first half of 2023.
The company is a joint venture between GSB, Dhipaya Group Holdings and Bangchak Corporation. It was established with registered capital of 1 billion baht, with GSB owning 49%, Dhipaya 31% and Bangchak 20%.
During the initial stage, the company piloted the loan service in 10 provinces, which included Bangkok, Nonthaburi, Pathum Thani, Chiang Mai, Khon Khaen and Chon Buri.
Mr Isara said one of the company's business goals is to put downward pressure upon the market's interest rate for land collateral loans.
Mee Tee Mee Ngern charges an interest rate of 6.99-8.99% per year when borrowers permit the company to check their credit records at the National Credit Bureau and evaluate their income. If the borrower does not allow this to take place, the company would charge them an interest rate of 8.99-9.99% per year.
If a borrower sought a loan from a loan shark by using land as collateral, they would have to pay an interest rate of around 24% on the loan. The interest rate for loans backed by land collateral at non-banks stands at around 15% per year.
Mee Tee Mee Ngern allows a borrower to borrow a maximum of 70% of the value of the appraised land. The amount would be limited to no more than 10 million baht for individual borrowers and no more than 50 million baht for juristic entities.
The maximum loan period is five years. Borrowers do not have to pay the principal in the first year but pay only the interest.
