example, at around 4, 000 baht per month. while thai commercial banks charged interest on personal loans at the rate between 12 - 24 % p. a., foreign banks charged between 12 to 46 % per annum, and foreign - owned non - bank companies charged an even higher rate of 12 - 58 % per annum. charges by non - bank companies sometimes seem misleading as they split the monthly interest charge into two parts : one part called interest rate, and the remaining part called fee. but their fee calculations are done in the same way as interest rate charges. for example, one non - bank company charges an interest of 0. 99 % per month plus a service fee of 3. 98 % per month. many borrowers, who do not fully understand this financial technique, misunderstand that they have to pay a one - time fee of 3. 99 % and an interest rate of 0. 99 % each month, which seems quite reasonable. in reality, however, such a company charges an effective rate of up to 58 % per annum. only when they begin their debt payment, would they realize that out of a total loan of 10, 000 baht, and a monthly installment of 600 baht every month, they would need up to eight years to repay the aggregate amount of debt! ladies and gentlemen, the bank of thailand has also sought for the expansion of our regulatory framework to oversee the personal loan business. the ministry of finance has issued a notification giving authority to the bank of thailand on july 2005 to set the ceiling on interest rates at 28 % per annum. every enterprise now needs to register for a license and bring its ceiling rate down to no more than 28 % per annum. likewise, the bank of thailand has urged these licensed operators to clearly and transparently disclose the computation of their interest rate calculation in order to prevent confusion among consumers. currently, we are monitoring closely the situation of consumer loans. if any further problems arise, the bank of thailand will not hesitate to take appropriate action. ladies and gentlemen, the proliferation of credit card and personal loan businesses have provided greater opportunity for people to spend more on necessary items before they start to save. this way of life would do no harm if individuals exercised self - control on their spending and were able to evaluate their capability to meet the expense of each installment. however, the effect of this easier means of payment is more likely to stimulate people to buy at the wrong time. not surprisingly, the “ save now, pay later

m r pridiyathorn devakula : the changing value of thai society keynote speech by mr m r pridiyathorn devakula, governor of the bank of thailand, at the ‘ horizon ’ s night ’, bangkok, 19 may 2006. * * * mr. president, distinguished guests, ladies and gentleman, on the occasion of the 21st anniversary of the graduate school of business of assumption university, i would like to express my warmest congratulations to the assumption university for the long years of services in producing many qualified graduates for the country, thus contributing to our continued development in this very competitive global environment. when brother bancha invited me to deliver an address on any subject i see fit, i had to ponder long and hard on what would be an appropriate topic for the celebration of the business school. your organizing committee proposed that i talk about my concern on the recent development in the thai society that i have voiced publicly during the new year, and that is on the changing value of the thai society. i am not sure whether the subject will suit tonight ’ s celebration, but i promise that i will do my best not to spoil your festive mood. as our economy grows, we have become influenced more and more by western values and ways of thinking. this has inevitably led to various changes in our behaviour and day - to - day life. one such example is the recent rapid expansion in credit card businesses which could be potentially harmful to the thai society, if not supervised appropriately. if all credit card holders graduated from business school such as yours, or if people earned enough income to pay their own bills, or if everyone had adequate financial literacy to properly understand and assess his or her own ability to pay and service debt, we would have nothing to worry about. the point is we are not talking about the educated or the financially literate group of our society. we are talking about the grass root level. it appears that this group has become the target of non - bank credit card companies, most of which are foreign – owned. they have targeted those at very low - income levels – people earning as little as 6, 000 baht per month. with their own disposable incomes barely enough to pay for daily living expenses, credit cards provide them with an extra source of funds and the ability to satisfy their pent - up demand for many items which would otherwise not be within their reach. however, after a few big ticket purchases, situations often arise where their income is insufficient