"Business is great," said Aoy, a moneylender who charges a whopping 10 per cent a month interest but finds plenty of takers in
Thai households are among the most indebted in
When the army seized power on
"I lend to small vendors or workers — quick money at a rate of 10 per cent per month, without collateral. It's that easy," said Aoy, giving just her nickname.
Her eye-watering interest rate was normal in the business, she said.
Official figures from the Bank of
Household debt includes loans from several sources, such as banks, credit card firms, insurance companies and pawnshops.
The junta has said it will tackle the problem of loan sharks, but has not said how. The
No downpayment? No problem
Cash is widely available on the Internet.
One advertiser calling herself Ree offers 24,000 baht in return for a new Honda Click motorbike she shows people how to buy with the help of a loan from a mainstream finance company.
"You go get a new motorcycle and I'll buy it. No down payment? No problem, I'll pay that," she told Reuters. She gets a bike worth twice what she has paid and the punters get quick cash — plus a big loan they can ill afford to pay off.
There are no official statistics on lending by loan sharks, but the
Consumption is pivotal in
"High household debt can't be cut very quickly," said Siri Ganjarerndee, an independent member of the central bank's monetary policy committee, adding the problem might be eased if the new government was able to boost growth and generate income.
The junta took less than a month to pay
But central bank Governor
Pimonwan Mahujchariyawong, a senior economist with
Growth forecast slashed
Though the economy is expected to improve later this year, growth in 2014 is likely be the lowest since 2011, when the country suffered devastating floods.
Its main interest rate has been at 2.0 per cent since March and most economists expect no change this year, given high household debt and inflation at a 14-month high of 2.6 per cent.
Despite the contraction in the economy, the banking sector's consumer credit rose 10.7 per cent in the first quarter from a year before, although it has slowed steadily since a 21.6 per cent jump in the final three months of 2012, when a state car subsidy scheme ended.
About 1.25 million of the record 1.43 million vehicles sold that year were bought with the help of the subsidy.
As the economy slows, debt insolvency tends to grow. Even so, total non-performing loans (NPLs) in the banking sector were low at 2.3 per cent of lending in March, up slightly from 2.2 per cent at the end of 2013.
But NPLs in the consumer credit category jumped 31.3 per cent in value in the first quarter from a year earlier, compared with a 20.5 per cent rise in 2012 and a drop of 18.9 per cent in 2010, when the economy grew 7.8 per cent, according to the NESDB state planning agency.
Average household income in
Nomura estimated in a report last month that households spend a third of their disposable income on debt servicing.
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