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Village fund to buy out loan shark debts

Village fund to buy out loan shark debts

BUSINESS: The Ministry of Finance is ready to allocate a total of B80 billion to village funds nationwide next year, in an effort to tackle the problem of “informal” debts – known to most people as loan-sharking.

Friday 23 September 2011, 04:20PM

Finance Minister Thirachai Phuvanatnaranubala announced that he had instructed the Fiscal Policy Office to meet with related agencies in search for measures to address the informal debt problem in the country.

As one of the measures, he announced that the ministry had set aside a budget of B80 billion to be disbursed to village funds across the country – B1 million per village – at the beginning of next year.

The main aim of the village fund is to allow debtors to get loans to pay off the loan sharks, thereby truning blck market debt into a more formal kind.

According to Mr Thirachai, the Government Savings Bank and the Bank for Agriculture and Agricultural Cooperatives will initially be responsible for the one-million-baht payment to each village fund.

The Finance Ministry will reimburse the banks later on but, as it is still not known how long the repayment process will take, the ministry will also pay interest to the banks until the principle is repaid.

The minister pointed out that no conditions had been set as to how much each debtor might borrow from the village fund.

But he stressed the need for the loans to be spent “wisely”, in parallel with efforts to build careers and generate income, in order to stamp out debt problems “in a sustainable manner”. – NNT

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