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17 May, 2019
On April 29, 2019, the Bank of Thailand issued Notification 4/2562 Re: The Determination of Rules, Procedures, and Conditions for Peer-to-Peer (P2P) Lending Businesses and Platforms. The notification took effect the following day.
The notification lays out a number of guidelines for P2P platform providers and P2P lenders. A P2P platform provider is defined as a person who provides an electronic system or network for P2P lending, while a lender is a natural person or juristic person who offers a loan through an electronic system or network (excluding crowdfunding providers). Key provisions are summarized below.
P2P Lending Platform Provider
A P2P lending platform provider must:
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not be a financial institution (including banks, although subsidiaries of banks are permitted);
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be a private company or public company incorporated in Thailand;
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have paid-in capital of at least THB 5 million; and
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have at least 75% of its total shares held by Thai citizens.
Directors of the platform provider must not have been involved in or accused of fraud or corruption, must not demonstrate a lack of qualifications or professional standards, and must be financially sound.
Custodians
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A qualified custodian is required, as platform providers are prohibited from holding the money, property, and securities of lenders and borrowers themselves.
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Custodians must either be authorized custodians under SEC regulations or authorized commercial banks (for escrow accounts) under BOT regulations.
Borrowers
Under this notification, borrowers must be natural persons who:
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have the capability to incur debts;
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are not P2P platform providers;
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are not directors, authorized persons, or major shareholders of the provider; and,
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have not already obtained personal loans from three lenders.
The notification also prescribes credit limits for loans. Loans for consumer purposes are limited based on the borrowers’ average monthly income as follows:
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For lenders whose average monthly income is below THB 30,000, the credit limit must not exceed 1.5 times their average monthly income.
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For lenders whose average monthly income is THB 30,000 or more, the credit limit must not exceed 5 times their average monthly income.
Borrowers can obtain loans for business purposes up to a maximum of THB 50 million.
Lenders
Unlike borrowers, lenders (who must not also be P2P platform providers) can be either natural or juristic persons. They must conduct client suitability assessments before providing loans to ensure adequate knowledge and understanding of each loan and the risks associated with it.
The notification also prescribes credit limits for providing loans as follows:
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There is no limit for loans provided by institutional investors, private equity trusts, or venture capital businesses under the Securities and Exchanges Act.
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All other lenders can provide loans that do not exceed THB 500,000 in a period of 12 months.
Interest
The interest rate for loans offered through a P2P lending platform must not exceed 15% per year, in accordance with the Civil and Commercial Code of Thailand.
For further information, please contact
Napat Siri-armart, Tilleke & Gibbins
napat.s@tilleke.com
