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The Department of Special Investigation is to propose the Justice Ministry to revoke the outdated Interest Rate Act B.E. 2475 and to replace it with a new law which will seek tougher penalties against lenders who overcharge their borrowers.
DSI chief Mrs Suwana Suwanchutha said that the Interest Rate Act has been promulgated since 1932 and has never been amended or updated to keep abreast with changing circumstances and economic conditions which are complex and complicated.
She pointed out that the economic system which puts emphasis on competition to make unreasonable profits has opened up the opportunity for the creditors to exploit legal loopholes to take advantages on their debtors.
Because most debtors are not in a position to bargain with the creditors and also because of their lack of legal understanding, she said that most debtors would struggle or try all means to get the money to repay their debts or, in case of defaults, are forced to sell their houses to settle the debts.
The proposed law to replace the Interest Rate Act B.E, 2475 will seek higher penalties against creditors who overcharge their debtors above the maximum 15 percent interest rate – three years imprisonment and/or a fine of 300,000 baht or five years and/or 500,000 baht in case the creditors are organized instead of one year jailterm and/or 1,000 baht fine under the existing law , said the DSI chief.
She added that the proposed law will redefine interest to also cover fees and other service charges imposed by the creditors such as credit card and finance companies.