Microfinance Industry Report: Thailand
This overview of the microfinance sector in Thailand is based on an assessment by the Banking With the Poor Network (BWTP Network) of the Citi Network Strengthening Program.
Thailand’s microfinance industry is small by conventional standards, with the government being the main provider. Little or no effort has been made to create a microfinance-friendly legal environment. Most private microfinance programs are small, and target specific groups of people. The current microfinance system in Thailand is divided into:
- Formal and large MFIs that operate under prudential regulations;
- Semi-formal MFIs that include legal, member-based MFIs operating under non-prudential regulations to promote savings and investment within communities;
- Informal independent and self-help savings and credit groups that include community member-based organizations promoting savings and providing lending services.
Key constraints include subsidized credit from multiple sources, difficulties for NGO-MFIs to increase credit interest to a sustainable rate, information asymmetry, fraud, lack of appropriate legal entity for MFIs, and lack of institutional capability. Finally, the Microfinance Master Plan that is being developed hopes to relax financial regulations, and attract commercial banks and new players into the industry.