Widow and street seller who could not feed her family turned to illegal lenders and was charged 30% interest per month. She called the police when threatened by a debt collector who wanted to sell her refrigerator. Thailand’s top cop this week revealed that some money lending rackets are charging interest at up to 60% per month on loans.

A Thai woman told a press conference in Khon Kaen of her harrowing ordeal at the hands of illegal money lenders following a crackdown across the country’s northeastern provinces led by top policeman General Surachate Hakparn who urged anyone in the kingdom who finds themselves under duress from loan sharks not to hesitate to call in the police.

Scene from last Thursday’s press conference where Assistant National Police Chief General Surachate Hakparn talked to 64-year-old boiled sweet corn seller Uthai Saensila who was threatened by a debt collector on February 16th last in Khon Kaen after she could not pay ฿250 to him on a loan with a monthly interest rate of 30%. (Inset) General Surachate or ‘Big Joke’ shows business cards distributed by loan sharks which can leave some borrowers forced to pay up to 60% per month interest on loans.

Former Immigration Bureau boss and now Assistant National Police Chief General Surachate Hakparn has urged any borrowers in Thailand who find themselves unable to pay exorbitant and excessive interest rates to illegal money lenders to make contact with the police for assistance.

The statement follows an extensive police operation across the northeastern provinces of Thailand this week in which 34 suspects or employees of three major loan shark networks were arrested.

Anti-Money Laundering Office to target kingpins directing smashed illegal money lending networks

The police chief also announced that the Revenue Department and the Anti-Money Laundering Office were initiating action against the heads of the networks to audit their finances and to seize assets believed to be the proceeds of illegal activity.

General Surachate gave a press conference on Thursday in which he gave reporters some insight into what was happening on the ground.

Rising household debt, one of Thailand’s most chronic problems addressed by the Prime Minister

The police activity follows a meeting at Government House this week in which the Prime Minister, Prayut Chan ocha identified household debt as one of the most pernicious problems facing the country’s economy and society.

This followed data released by the National Economic and Social Development Council (NESDC) in Thailand which showed that over 98.1% of the working population in Thailand was employed and that people, despite an adverse economic environment and tightened money supply, have been striving to earn more income by working more hours.

Household debt hovers at 90% of GDP since the end of last year although the growth rate of new lending slackened in the last quarter to 4.1% 

It comes as the rate of increase in borrowing by households within the banking system showed signs of slowing down although the country still faces record-high levels of household and consumer debt which in September 2021 stood at 89.3% of GDP.

People who cannot get credit with the banking system fall prey to the nasty world of street debt, ‘Big Joke’ reveals loan rates of up to 60% per month

The answer for many people in Thailand who have fallen by the wayside of traditional banking arrangements and have developed bad credit scores or people who have never been able to obtain banking facilities at all, is to turn to street money lenders and a world that, in Thailand, has got grimmer and nastier even over the last ten years.

On Thursday, General Surachate showed reporters business cards distributed by loan shark gangs in Khon Kaen which advertise low lending rates and encourage borrowers to make contact.

Those who phoned in were told that the loan rate was only 2% but were forced to sign a contract before money was paid over.

They then discovered that the rate was 2% per day or 60% per month which is well beyond the legal rate set by law in Thailand for borrowing money, making such contracts automatically void.

Maximum interest rate for loans in Thailand by law is 15% per annum, statutory rate just reduced to 3%

Under Section 654 of Thailand’s Civil code, the maximum annual interest rate on a loan is set at 15% per year.

Under an emergency decree, which came into force in April 2021, the country’s statutory interest rate was lowered from 7.5% to 3%. In the case of debt defaults, this rises to 5%.

The change is also retrospectively effective.

This rate will be revised by the Ministry of Finance every three years according to the new regulation bearing in mind economic and changing banking conditions.

This is the rate applicable where no legal agreement exists or where a contract has been voided because the terms are illegal as in the case with illegal lending.

The maximum lending rate however is 15% per annum.

Even in relation to credit card debt in Thailand, the Bank of Thailand moved last year as part of its response to the pandemic, to lower the applicable annual interest rate from 18% to 16%.

Intelligence gathered by the Royal Thai Police on northeastern money lending gangs before the raids

General Surachate, known in Thailand as ‘Big Joke’, told the press conference that an intelligence team at police headquarters had gathered information on the money lending gangs in advance of last week’s police operations.

Raids were carried out throughout the provinces of Khon Kaen, Udon Thani and Nong Khai. 

Officers were targeting 24 different networks with eighteen of these being in Khon Kaen, nine in Udon Thani, six in Nong Khai and one in Nakhon Phanom province.

In the course of the raids, 34 different suspects were arrested and police seized four cars, twelve motorbikes, 17 bank accounts and a range of financial documents including ledgers showing debts owned by borrowers. 50,000 business cards were also seized.

Warning to loan sharks about advertising

This led General Surachate to warn money lending crooks throughout Thailand on Thursday that such advertising will be met by immediate police reaction.

He said that cards discovered by the police would be followed up including relevant contact numbers which would be used to track down those involved in such activities which prey on the most vulnerable and unfortunate people in society.

The top police officer said that the anti cybercrime resources of the Royal Thai Police were being deployed against the gangs based on intelligence learned from this operation which showed the leading gangs making extensive use of social media to communicate with borrowers and co-ordinate their operations.

Thai drug dealers go high tech with online social media accounts the key mode of distribution

This is a trend also seen in the world of drug dealing in Thailand over the past decade in line with the rise of social media in the kingdom.

Two kingpins directing loan sharking web from western Thailand, all arrested in police operation

General Surachate then turned to the kingpins that police have learned are behind the networks smashed last week. He said three individuals are believed to have been directing the illegal lending activity targeted by police agencies.

These were based in the centre of Kanchanaburi in western Thailand, the Bang Pong district of Ratchaburi province, also in western Thailand, and the Kamphaeng Saen district of Nakhon Pathom in central Thailand.

He indicated that action at the highest level would be taken against those involved who he confirmed have already been taken into custody.

‘Police have already arrested the three major loan operators. Tax and asset confiscation measures will be taken against them,’ General Surachate declared. ‘Police will coordinate with the Revenue Department and Anti-Money Laundering Office in implementing asset confiscation and tax measures.’

64-year-old woman recounts her ordeal dealing with illegal money lenders which came to a head last month

The top cop illustrated the situation by giving reporters an example of the misery and evil perpetrated by those involved in the trade.

64-year-old Uthai Saensila lives in the Muang area of Khon Kaen. Her husband was a police officer who passed away eleven years ago in 2011.

Ms Uthai cares for her 29-year-old son who suffers from a mental health condition. Her family is living in rented accommodation which costs ฿1,000 per month with a further ฿1,000 needed for electricity and water costs.

The elderly woman sells boiled sweet corn in her efforts to make a living. This enterprise requires ฿700 to ฿1,000 a day to buy basic ingredients.

The recent downturn in the economy left the woman short and without enough money to provide food for her family. This led her to borrow ฿5,000 each from four moneylenders in the area.

Forced to pay four loans each day at 30% interest per month but could not keep up with the debt collectors

Because she was operating a business, the interest rate was more competitive at 30% per month. Ms Uthai had to pay back ฿25,000 within 25 days with one day’s payment in advance. This left her with ฿250 per day owed to each lender over 24 days from her small business selling boiled corn.

It all came to a head in the middle of February.

‘On February 16th, a debt collector working for Bang Boss came to my house in the morning to get the daily payment, but I did not have the money. The man threatened to physically assault me and said he would take my refrigerator for sale,’ she revealed this week. ‘It was scary. I filed a complaint at Muang police station as I didn’t want the debt collector to take my refrigerator.’

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