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 principle 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. For the goals of poverty alleviation and reduction in the inequality in access to capital, especially for the basic population groups that do not have regular income with the development on “Access to financial services”, the Company has implemented strategies and results of operations as follows.
Consideration on the loan approval taking into the account of the Asset-Based Assessment Approach
Conventional lending is primarily the assessment on personal risks based on data analysis. Some types of information such as proof of income and credit bureau information are the information that most of the country’s population do not have since it is a group of population with non-regular income. Therefore, the Company’s credit revision and approval process focuses on Asset-Based Assessment conditions (vehicle title loan and title deed mortgage loan) instead of risk assessment data from proof of income or credit bureau information. Such assessment method is therefore a solution for these populations to gain access to alternative credit sources and reduce the inequality in financial access of the country.
Moreover, the company has begun to use alternative data such as utility bill payment, bank account outstanding balance, and farm book as part of the loan approval procedure to encourage customers who have no legitimate financial statement or collaterals to have access to financial source.
|Shares of loan products approved by the Company’s collateral valuation method in 2020||Shares of groups of Company’s customers in 2020|
|Car registration loan (million baht) 50,984.60 72.21%||Group of customers with regular income 22.36%|
|Land title deed mortgage loan (million baht) 5,277.04 7.47%||Group of customers with non-regular income (ESG) 77.64%|
|Total of secured outstanding loan (million baht) 56,261.6 79.68%|
|Total of unsecured outstanding loan (baht) 14,345.64 20.32%|
Increase of opportunities for customers to access credit sources by expanding branches
The Company continues to focus on reaching customers with a strategy to expand the branches to cover all regions of the country. This is carried out according to the Company’s medium-term business strategy plan covering from 2018-2020 enabling customers and the public, especially customers who do not have access to the services of commercial banks or digital Banking, to access the Company’s services more easily and more conveniently. In the year 2020, the Company opened new 777 branches being the large 36 branches, 314 sub-branches, and 427 service centers. However, the average loan outstanding rate per branch is 14.45 million baht.
Design suitable credit products, conditions, and operating procedures to control the risk of default payment
The Company considers collateral for credit products with low default payment risk by setting the credit ratio in relation to the appropriate collateral value. Setting a maximum limit per contract and a low level of customers together with the suitable interest rates for credit risks and the loan approval process as well as the debt collection process are all factors contributing to the non-performing rate of the Company’s credit portfolio to remain below the industry’s non-performing rate. Not only that, the company also concerns about the environmental and social aspects. Thus, the ESG factors have been a part of the crucial consideration for the customer assessment processes including Know Your Customer (KYC) and Customer Due Diligence (CDD). The area covers the customer characteristics, the quality of collateral assets, etc.
In the year 2019-2020, the Company has expanded new credit product which is new motorcycle hire purchase loan designed to be different from other motorcycle hire purchase loans in the general industry. In the first phase, the Company allowed for the approval of motorcycle hire purchase loans only to existing customers who had good history of payment. It has extended the credit term of up to 60 months which is longer than the industry average of 24 months and the interest rate of 24% which is lower than the industry average rate of 30%. This allows low monthly payments for customers resulting in the non-performing debt ratio of the Company’s motorcycle hire purchase loans to become as low as 0.1%, compared to the industry’s non-performing debt ratio of approximately 10-12%. As at the end of 2020, the Company had total outstanding hire purchase loans 359 million baht.
Respect for the customer’s satisfaction, rights and personal information
- Personal information of customers
For the Company to operate business in accordance with the Personal Data Protection Act B.E.2562 which was published in the Royal Gazette on 24th May, 2019, and will come into effect from 1st January, 2020 onwards, the Company sets a related policy of “Information and Security Protection Policy” and discloses such policy on the Company’s website. Apart from the aforementioned policy, the Company has also raised risks associated with the protection of personal information with the Legal Department and Information Technology Department to perform the operation in order to reduce or limit the risks involved. In 2020, the Company has improved the customer information retention process and strictly complies with such laws throughout the organization to protect customers’ personal information.
- Customer satisfaction survey results
The Company aims at creating the good experience for customers in order to continually improve the service process to customers and listen to the customers to pursue their interests. The opinions on the service are important. Each month, opinions regarding customer service are communicated through internal channels to each branch. In addition, customer feedback is the main indicator of the operation of the branch and the Head Office.
Note: The Company categorized the satisfaction into 5 levels which are very satisfied (5), satisfied (4), moderate (3), dissatisfied (2), very dissatisfied (1) which the above levels are the total scores of very satisfied (5) and satisfied (4)
|Satisfaction survey questionnaires 84,450 questionnaires were sent.||The satisfaction level on Muangthai Capital 4.0 in 2020 is 91.99% from the number of samples of 10,895 persons||Whistleblowing channels via email or channel to receive the complaint on the Company’s website||Whistleblowing channels via telephone service center 02-483-8888|
Elevation of the industry’s ethical standards
In 2020, the Company joined with operators in the Vehicle Title Loan Trade Association and Personal Loan Association to attend the discussion organized by the Bank of Thailand on the issues related to elevating the standard of business operations in the industry, such as measures to provide assistance to customers affected by the Covid-19, adjustment of personal loan interest rate, and Nano finance under supervision by 3-4%. This included the adjustment on the methods for calculating defaulted interest rates and guidelines for fee charging in the collection of fees in order to benefit the people as much as possible.
Raising the awareness and financial discipline for customers
- “Roo Rub Jub Jaiy” project
The Company also initiated the “Roo Rub Jub Jaiy” project which was the accounting program for the users to record the income and expenses according to the codes of practices of the Bank of Thailand in response to the goal of reducing the household debts in the public sector of the Bank of Thailand. The Company’s customers and general people are allowed to download the program from the Company’s website. It can be used without charge. The program can analyze spending behavior whether there is discipline or without discipline. If the customers and the general public need a revenue-expense accounting list, it can be requested from every branch of the Company.
- “Debt Clinic” project with Sukhumvit Asset Management (SAM)
Apart from social activities that the Company initiated to support the establishment of financial discipline for the Company’s customers and the general public, the Company also joins with SAM to participate in the Debt Clinic in order to help small debtors with many creditors which are bad debts, credit cards, cash cards, and personal loans without collateral. This is in order to have an opportunity to solve the debt problem along with promoting learning, planning and creating good financial discipline for debtors and interested people to prevent the economic and social problems of the country in the long-run. This year, there are 19 nonfinancial entrepreneurs participating.
- Join the project to educate the public about microfinance business
Financial Commission, Financial Institutes and Financial Markets, House of Representatives held the seminar on “Reduction of economic inequality and upgrading the foundation economy: northern region” on Friday 21st August, 2020, at the main meeting room, Faculty of Economics, Chiang Mai University, with a live broadcast via Facebook live by Mr. Chuchat Petaumpai, CEO of Muangthai Capital Public Company Limited. He joined as an expert speaker in the seminar together with Mr. Withai Rattanakorn, Director of Government Savings Bank, and Mr. Apirom Sukprasert, Manager of Bank for Agriculture and Agricultural Cooperatives, by presenting opinions to build a better understanding of the role of microfinance businesses in reducing financial disparity for students, teachers and the general public.
Focus on the provision of excellent and equitable service
As of 31st December, 2020, the Company has a total number of 2 million outstanding customers. The Company sees that enhancing the efficiency in developing a good customer experience is an important sustainability strategy. In 2020, the Company has performed the following operations:
- Excellent Service Policy
The Company focuses on building service standards by providing training for the employees. The results of the service assessments were included as part of the Key Performance Index (KPIs). The recommendations received through the customer thanking letter will be published in the Company’s internal communication channel to be used as the scores to evaluate the service performance of each branch every month. In addition, all employees are required to complete the “Excellent Service Techniques” which in 2020, there was no training due to the COVID-19 outbreak.
- Customer Engagement channel
Although most of the Company’s customers are Offline in 2020, the Company found that the number of customers who contacted the Company via online channels such as social media, telephone, email has increased as well. The summary of the channels are as follows:
- Structure and channels of fair service provision governance (Market Conduct)
Responsible agency Channel for investigation Internal agencies Audit Department
- Internal audit
- Whistleblower channels
- Customer's Satisfaction survey
Third party agencies Financial Consumer Protection Center
- Call Center: 1213
Innovation Development and Digital Transformation
Muangthai Capital 4.0 Application
The Company has developed an application to facilitate customers during the Covid-19 outbreak which allows customers to verify the validity of their receipts. Besides, the customers can pay through digital payment without having to travel to the branch. It also helps reducing the paper usage. Throughout 2020, spending via application was 9,416 times. *