BOT tightens control on hire purchase and leasing industry, capping high-interest rates

Currently, the total outstanding credit in the economy amounts to 1.6 trillion baht, accounting for 10% of Thailand's household debt. This has a considerable impact on the overall economy.

However, the industry has also caused serious negative effects on both the economy and the borrowers. It has been found that one-third of the outstanding debt comes from businesses that are not regulated, leading to high interest rates and excessive service charges that significantly affect borrowers.

BOT Announced Tighter Controls Over Hire Purchase and Leasing Industry

Pirajit Padmasuta, Senior Director of Financial Consumer Protection and Financial Service Provider Supervision at the Bank of Thailand (BOT), briefed the media after the Royal Decree was issued to bring the hire purchase and leasing businesses for cars and motorcycles under the Financial Institution Business Act B.E. 2551 (B.E. 2025) in the Royal Gazette.

This decree will take effect 180 days after its publication, beginning on December 2, 2025.

The BOT has stated that the hire purchase and leasing industries play a key role in the economy, with the total outstanding credit amounting to 1.6 trillion baht by the end of 2025, or nearly 10% of the total household debt in Thailand.

It was noted that many businesses in this sector are not under supervision, which is why the BOT aims to bring hire purchase and leasing under regulation. This is to raise service standards, ensure fair consumer protection, and maintain financial stability, especially in addressing Thailand's household debt issues.

In the past, many hire purchase and leasing businesses that were not closely monitored had caused numerous complaints from the public. Issues included incomplete information, unfair fees, and substandard debt restructuring practices.

For this reason, the BOT recognizes the necessity of closely regulating the hire purchase and leasing industry to promote fairness and transparency in the market, raise standards, and ensure equity.

The BOT believes that bringing these businesses under regulation will bring comprehensive benefits to consumers, businesses, and the industry as a whole. Consumers will receive clearer protection, and interest rates and service fees will become more fair and transparent.

There will be clear standards for calculating interest rates, debt restructuring, and other debt management processes, ensuring that all businesses follow the same guidelines. Information about financial products will be clear and complete, enabling consumers to easily compare options and choose providers offering the best terms.

Additionally, from the business sector's perspective, this regulation will help raise the overall industry standards, creating a level playing field for all players. All businesses will operate under the same rules and standards, whether they were previously regulated or not. This will reduce any advantages or disadvantages caused by some businesses being regulated while others were not.

Moreover, this will enhance the credibility of the industry in the eyes of the public and consumers. With more complete and systematic data, the BOT will be better equipped to manage the financial system's stability and household debt more effectively.

3,000 Businesses to Be Brought Under Regulation

In total, there are 3,000 businesses in the hire purchase and leasing sector that will be brought under the regulation of the BOT in the future, as required by law.

These businesses include large businesses with loan portfolios exceeding 1 billion baht — around 60 businesses; medium businesses with loan portfolios ranging from 100 million baht to 1 billion baht — around 150 businesses, and small businesses with loans under 100 million baht, which could total as many as 3,000 businesses.

Moving forward, the BOT will require all of these businesses to register with the Bank of Thailand to ensure proper oversight and compliance with regulatory standards.

In terms of regulation, large businesses that could potentially cause widespread impact in the event of issues will be closely monitored and subject to clearer and stricter rules.

For smaller businesses, the BOT may utilize technology to help in monitoring and regulation, including "random checks" in the future.

“The BOT will regularly monitor large companies closely due to the large number of customers affected. Smaller businesses may undergo random checks, using technologies like Social Listening to track advertisements and operational behaviors, or based on the number of consumer complaints. If any issues arise, the BOT will step in to investigate,” said Pirajit.

Impact on Hire Purchase and Leasing Loan Volumes

Under the BOT's enhanced regulatory framework, it is acknowledged that some businesses may not want to comply with strict regulations and may consider it not worthwhile to follow the new rules. These businesses may choose to exit the market.

It is accepted that this could lead to a reduction in loan issuance. However, the BOT's goal is to gradually reduce household debt and encourage loans that are more aligned with the borrowers' ability to repay.

On the other hand, the BOT believes that bringing businesses under regulation and ensuring compliance with standards will provide borrowers with a better opportunity to repay their debts. This will be supported by fairer fees and interest rates, which will ultimately reduce issues related to inappropriate fees and improve repayment capacity in the future.

Watch for New Interest Rate Review by Consumer Protection Agency

Regarding the interest rates for hire purchase loans, the Office of the Consumer Protection Board (OCPB) currently sets the ceiling interest rates for hire purchase and reviews them every three years. The next review is scheduled for October 2025.

Therefore, the BOT cannot yet determine whether the current interest rates are appropriate. It is expected that the interest rates will be more clearly defined after December 2, based on considerations of interest rates, costs, risks, and ensuring that consumers are not overburdened.

“When asked whether our regulations will cause some businesses to fail, it’s hard to say. Certainly, some operators may not want to adhere to stricter regulations, and some may feel it’s not worth it for them. However, what we want to emphasize is that when we regulate businesses, we also consider appropriateness and aim to maintain a balance between the economy, consumer protection, and the sustainability of businesses. Our goal is not to harm businesses by stopping them from earning or growing. We have to maintain balance in all aspects,” said Pirajit.

Timeline for Hire Purchase Loan Regulation

Regarding the plan and timeline for implementation, the announcement was published in the Royal Gazette on June 5, 2025, and will take effect after December 2, 2025.

Therefore, the period from June to December 2025 will be dedicated to preparations and focus group meetings, starting in July 2025. The BOT will conduct focus groups with businesses, divided by size, to gather feedback, issues, and opinions regarding future regulatory measures.

For the development of guidelines, the BOT has already prepared a draft for public consultation, which will then be presented to the Financial Institutions Policy Committee. The goal is to have the regulations ready for implementation immediately after December 3, 2025, the day after the Royal Decree becomes effective.

By September 2025, the BOT will open a system for businesses to begin registration, which will be available for six months. Businesses that fail to register within the specified time frame will face penalties under the Financial Institution Business Act.

Srisawad Group Ready to Cooperate

Thida Kaewbutta, Strategy Director at Srisawad Corporation Public Company Limited (SAWAD), said that Srisawad Group is ready to cooperate and operate under the supervision of the BOT.

“We have been aware of this regulation for about two years and have been continuously preparing, particularly to ensure that consumers receive fair financial services (market conduct).

We believe that bringing the hire purchase and leasing businesses under the Financial Institution Business Act and under the BOT’s supervision will help elevate the industry’s standards, ensuring a uniform service quality system. This will allow for fair competition and greater transparency, ensuring that consumers receive services and interest rates that are consistently fair across the industry,” she said.

Muang Thai Capital Says Consumers Will Benefit

Parithad Petampai, Deputy Managing Director of Muang Thai Capital Public Company Limited (MTC), stated that it is a positive development for hire purchase and leasing businesses for cars and motorcycles to be regulated under the Financial Institution Business Act and supervised by the BOT. He believes that consumers and the country’s economy will greatly benefit from this regulation.

Under the supervision of the BOT, the regulation will ensure that all checks and processes are carried out in a correct and standardized manner across the entire industry, as there are numerous operators in this sector across the country.

He also emphasized that businesses will need to develop in ways that are socially acceptable, comply with the law, and meet established standards. This will improve the status of both the companies and the industry as a whole.

Industry Insiders Warn Small Businesses May Struggle Without Adaptation

An industry insider in the hire purchase business pointed out that the shift to BOT regulation is not expected to affect large operators, but smaller businesses may struggle if they do not adapt and prepare to comply with the new regulatory framework.

“Most large operators are already in favor of BOT regulation because, in the past, there has been unfair competition in terms of interest rates and fees, which increased financial costs beyond expectations. When the economy is not performing well, operators are less likely to issue loans, which negatively impacts the overall financial system. However, with the BOT’s regulation, there will be a standardized system, especially for interest rates and fees, which will benefit all parties involved,” the source added.