The Company has laid out a guideline for sustainable development by creating shared value (CSV), which is implemented to develop and solve economic and social problems to create economic value and society along the way. The Company has considered that financial inequality is an economic problem that has been rooted in Thailand for a long time. It is also known as the origin of the microfinance business in Thailand. Therefore, the principles of the Company is to bring the operations used by the Company as a tool to reduce financial inequality among Thai people. The Company aim to be an alternative loan source to increase opportunities for people to easily and conveniently access loan sources. Nowadays, the microfinance loan industry is accepted and has grown rapidly. This creates a significant impact on the national economy at the macro level, such as Growth Domestic Product, Household Debt, Working capital and agricultural growth rate etc. Thus, the Company considers that the microfinance business should act responsibly to customers so that it will alleviate the problem of economic inequality and keep up the existence of a sustainable microfinance loan industry.
“Responsibility to customers” issue becomes an important issue the Company regards as a top priority and the operating philosophy that has always been adhered to, as reflected in the characteristics of the Company’s diverse products which have been designed for the general public to easily access. The products include interest rate, fair fees, appropriate and sufficient size of the loan and provides excellent service equally and thoroughly, the nationwide expansion of branches which aims to improve access to financial resources of people in every locality while also distributing geopolitical risks. However, the Company has raised the responsibility to customers issue for consideration and found there are still other dimensions that affect the economy, society and environment. Hence, the Company should consider additional operational guidelines for sustainable development.
Therefore, in this year 2019, the Sustainable Development working group has presented to the Corporate Governance Committee to consider improving customer responsibility issues by altering the SD structure, SD Goals including more issues to consider and expanding the scope to cover the entire microfinance loan industry. The guidelines for sustainable development in the Company’s economic dimension are as follows:
Responsibility to Customers
1. Financial Inclusion Development with Responsibility
1.1 Development of microfinance products that enable accessibility to unbanked people for fair and transparent financial costs
The main target of the Company is a group of customers without the regular income that can be segmented according to career fields as follows, as of December 2019:
Most customers without regular income are unable to request loans from financial institutions such as commercial banks, causing financial inequality. The Company then focuses on microfinance loan products that use vehicle registration or title deeds as guarantees that borrowers will return for repayments. Working this way, credit approval process, hence, is paying attention to the collateral value and the loan-to-value rather than income or proof of income of the applicant. As a result, this group of customers can access the source of loan as well as customers with regular income. In the past, the Company has continuously developed new microfinance loan products mainly to respond to the needs of customers which can demonstrate the following evolution:
New motorcycle hire-purchase loans
As the Company anticipated the problems and realised opportunities from the need for new motorcycle hire-purchase of both existing and current customers, in 2019, the Company has introduced new credit products. It is the new motorcycle hire-purchase credit for the Company’s customer groups who want to buy a new motorcycle with an appropriate hire-purchase interest rate for their credit risk. By evaluating and considering the customer’s credit history from the Company’s internal database system, this rate is lower than the market average interest rate.
The Company operates the aforesaid motorcycle hire-purchase business through a subsidiary company; Muangthai Leasing Company Limited, that has been approved the establishment at the general meeting of shareholders on 26 February 2019 with a registered capital of 20 million baht and has a 99 per cent shareholding.
As of 31 December 2019, the outstanding value of the new motorcycle hire-purchase loans of Muangthai Leasing Company Limited is equal to 84 million baht.
1.2 Branch expansion to be sufficient and appropriate for access to public loans
The strategy to expand the number of branches has subsequently followed the Company’s medium-term business strategy which covers from 2018 - 2020 by focusing on the growth of the number of receivables, via loans through the expansion of branches throughout all regions of the country. This results in customers and the public can access the Company’s services more easily and conveniently.
The branch management system is directed as a network type, that is, the branch is divided into 3 types, major branches, sub-branches and service centres. Each major branch is responsible for managing 10 sub-branches and 10 service centres, with branch managers responsible for management.
Growing number of branches to increase access
In 2019, the Company has opened a total of new 828 branches, 36 large branches, 565 sub-branches and 227 service centres. However, loans per branch equal to 14.62 million baht, which is still close to the average loans per branch at the end of 2018 which is equal to 14.38 million baht, meaning the Company can still maintain the efficiency of loan receivables growth through branch expansion firmly.
1.3 Service Excellent, thoroughly and equally to customers
As of 31 December 2019, the Company has a total number of 1,797,000 outstanding customers, although most of them are offline customers. However, in the past year, the Company found that the number of customers who contacted the company via online channels such as social media, telephone, email, has more than 65,527 persons, growing from 2018 more than 51.12 per cent. Hence, increasing the efficiency of experience development is an important strategy for sustainable development. In 2019, the company has carried out the following operations:
AI Chatbot Development
From the development of Line and social media to increase convenience for customers, currently, the Company, therefore, considered to improve the service to align with the excellent service policy by developing AI Chatbot in answering basic questions such as product information, branch search etc. as the number of customers who communicate through those channels is increasing. The management team has assigned the working group, who are customer relations officers, participate in AI training because they are familiar with the questions and the answers that customers need most.
K-Plus payment method development
The Company has started the service of Cross Bank Bill Payment to facilitate the customers to pay the loan more conveniently and quickly via the online banking application of Kasikorn Bank K-Plus without fees.
Send money online nationwide
The Company, together with Bangkok Bank Public Company Limited, have opened an online remittance service throughout Thailand to allow customers with a credit limit of more than 50,000 baht to go to the bank at any branch of Bangkok Bank Public Company Limited to increase the convenience in using services.
1.4 Cultivating financial knowledge and discipline for customers and the public
From the research results that Bank of Thailand together with The Nielsen Company (Thailand) Ltd. conducted household surveys throughout the country under the Thai Household Debt Survey Program and the BOT-Nielsen Household Financial Survey, it is clear that household debt is necessarily caused by lack of financial discipline in the household. However, even though the Bank of Thailand issues measures to solve the debt problem for example; promoting financial literacy; measures for supervising credit card loans and personal loans under supervision Debt Clinic Project, and the project to proceed to eliminate the informal debt to zero, the household is still unable to establish financial discipline.
In this regard, Muangthai Capital Public Company Limited, as a retail loan service provider (Microfinance) operating the business with good governance practices, intend to reduce financial inequality and promote Thai people to have access to loans with a fair and transparent interest rate under the supervision of the Bank of Thailand. Therefore, the Company in cooperation with the Bank of Thailand aims to create a CSR-in process project to help strengthen financial discipline for the general public and our customers as the Company is a retail loan provider (Microfinance) with the maximum number of customers and branches as well as having the largest outstanding loan in the country. The company has determined that it can reach millions of people and customers through various communication channels.
The Company sincerely hopes that the effort in initiating the CSR-in process social project to instil financial awareness and discipline for customers and the public will be part of creating financial stability for users, strength for the national economy and also to maintain the quality of the Company’s assets sustainably. In consequence, in 2019, the company initiated the CSR-in process as follows:
KYI-KYE (Know Your Income-Know Your Expense) Project
The company has initiated an expense awareness programme for users to record income and expenses based on the guidelines of the Bank of Thailand. This project the reduction of household debt in the public sector of the Bank of Thailand as well as being open to the customers of the Company. The public can download the programme from the Company’s website without charge. The programme can analyse spending habits for users to understand their spending behaviour and track expenses, income, and savings. Income and expense book can be requested from every branch of the Company. This year, there are more than 9,000 employees participating in the project and the next year, the Company plans to expand the scope to customers who have defaulted to assess the achievement of changes in repayment behaviour which can reflect financial discipline.
“Debt Clinic” project with SAM
Apart from social activities that the Company initiated to support the establishment of financial discipline for the public, the Company also joins with SAM ( Sukhumvit Asset Management Co., Ltd) to participate in the Debt Clinic Project to help small debtors with many creditors that include credit cards, cash cards, cash and personal loans without collateral. This project plans to increase an opportunity to solve the debt problems along with promoting the learning, planning and creating good financial discipline for debtors and interested people which will help prevent the economic and social problems in the long term. Within this year, there are a total of 19 nonfinancial entrepreneurs joining.
2. Industrial Ethic Conduct Development
The company as a leader in the microfinance loan industry, therefore, aspires to create a standard for business operations of the microfinance loan industry to stand based on good governance and become an industry that is accepted as other financial institutions. The company has practised as an example and tried to seek cooperation from large and small operators in the same industry as previously reported in the 2018 Sustainability Report (page 30). The Company is expecting that if the microfinance loan industry has been elevated to the standard of business practices, key stakeholders especially social customers and communities will be the highest beneficiary.
In this regard, in 2019, the company has additional operations continuously by defining strategies for various departments, put into practice for sustainable development as follows:
2.1 Respect to the satisfaction, rights and data privacy of the customers
Tablet devices installation for customers to assess satisfaction
The company’s main goal is to provide the best service. Customer satisfaction is, therefore, an important factor that helps the company achieve its sustainability goals. Throughout time, the Company has made efforts to develop communication channels both offline and online. This year the Company began to bring tablet devices to be installed in the branch to increase channels for customers to participate in the satisfaction assessment quickly, conveniently and efficiently. Customer satisfaction statistics will be saved in the system and will be used to assess the quality of service in each branch, while also improving the quality of credit products and services.
To conduct business in accordance with the Data Privacy Act announced in the Government Gazette on 24 May 2019 and will take effect from 1 January 2020, the Company has set relevant policies of data protection, information security and disclosed on the website of the Company. In addition to the formulation of the aforementioned policy, the company has also increased the risk of personal data protection with a legal department and the Information Technology Department to reduce or limit the risks involved.
2.2 Participation in the development of fair and transparent customer service supervision
In 2019, the Company, in association with the Vehicle Title Loan Trade Association, has cooperated well with the Bank of Thailand in participating in the discussion and share opinions on various issues for the Bank of Thailand to set regulations or guidelines to be in the same direction with the Bank of Thailand’s policies; such as guidelines for central standards in assessing the debt serviceability of retail debtors and the Debt Clinic Project, for supervising businesses under financial institutions and entrepreneurs that are not financial institutions.
|Contribution to Vehicle Title Loan Trade Association||THB|
|Initial Registration Fee||25,000|
|2018 Membership Fee||20,000|
|2019 Membership Fee||20,000|
|2020 Membership Fee||20,000|
|Extraordinary Servicing Fee||95,000|
|Total Accumulated Contribution||180,000|
2.3 Being a role model organisation in the area of corporate governance
The Company has been honoured as “excellent” (5 stars) for the second consecutive year from the results of the corporate governance assessment of listed companies for the year 2019, organised by the Thai Institute of Directors Association (IOD). And in the same year, The Board of Directors also received an honour announcement for being “Board of the Year for Distinctive Practices” of the year 2018/19,which is an honour to the board of companies listed on the Stock Exchange of Thailand who can operate efficiently and effectively by taking into account transparency and fairness for all stakeholders under good corporate governance principles, organised by 6 leading private sector organisations and the Thai Institute of Directors Association. Besides, the company has been certified as a member of the Private Sector Collective Action Coalition Against Corruption (CAC) on May 21, 2019.