- Offering loans only to customers with stable income
Given the fact that the personal loan segment contains higher risk than auto-backed loans or hire purchase loans, FM pays special attention to strict loan approval process. Loans are offered to only civil servants, employees of sub-district administration organization, sub-district heads, village heads or officers at state enterprises. In addition, in order to minimize risk, all customers are required to have at least two guarantors.
- Cautious lending
Before approving personal loans, FM examines the qualification of customers very carefully by checking the basic information from the Group’s customer base as well as other data base, e.g., the data base from Credit Bureau. All lending cases must be approved by the head office.
5) Pricing Policies
FM does not have a policy to cut interest rates to compete with other players but the firm rather focuses on qualifications of customers and guarantors. The Company’s funding cost and operating cost is set at a certain level that enables the Company to remain profitable and competitive. Thus, the Company does not have a policy to provide lending services below funding costs.
The credit limits are based on customers’ ability to repay debts. Generally, the maximum credit limit is not more than 2.5 times of customers’ net income and not exceeding Baht 50,000 per customer, with maximum installments of 36 months. In light of this, the credit management department is in charge of determining the appropriate credit limits, taking into account customers’ repayment ability.
2.1.3.4 Procurement of products and services
The Company’s funding comes mostly from borrowing from financial institutions at Baht 1,649.43 million accounting for 20 percent of the total funding sources. The figure suggests that the Company is rather highly dependent on borrowing from financial institutions. Nonetheless, the Company also has short-term loans from the related party (CIMB (Thailand) Bank), bills of exchange offered to institutional investors or high net worth investors for use as working capital and a means to inject liquidity to the Company; these
ส่วนที่ 2 หน้า
accounted for 38 percent of the total funding so, as of 31 December 2014. Moreover, the Company also has funding from shareholders’ equity at 42 percent of the total funding.
Source of funding 31 December 2012 31 December 2013 31 December 2014 million percentage million million % million
Short-term loans from financial
institutions 2,550.56 64.52 3,343.31 57.89 1,649.43 20.11 Bills of exchange -- -- 1,222.00 21.16 2,315.00 28.22 Short-term loans from the related
party 438.31 11.08 74.00 1.28 300.00 3.66
Payables to the related party 348.71 8.82 -- -- -- -- Obligations under finance leases 4.37 0.11 5.77 0.10 5.96 0.07 Shareholders’ equity 611.17 15.46 1,130.60 19.58 3,432.09 41.84
Total 3,953.11 100.00 5,775.68 100.00 8,202.48 100.00
As for future funding, the Company has a policy to find funding to suit the purposes. The Company also takes account of the repayment period and the debt to equity ratio.
2.1.4 Debt Collection Business
In 2014, SAWAD funded a subsidiary, Srisawad Asset Management (SAM) to operate debt collection business and purchase distressed assets for management
2.1.4.1 Characteristics of the products or services
On 9 July 2014, SAM was granted a permission from the Bank of Thailand to register as an asset management company, according to the Royal Act on Asset Management Company. The company purchases or receives transfers of distressed assets from financial institutions for its own management. SAM also provides debt collection services. During an early stage, SAM will focus on debt collection particularly for secured debts
SAWAD Group has highly experienced debt collection staff, with extensive service coverage across the country. As of 31 December 2014, SAWAD Group’s service coverage network included 1,059 branches, enabling the Company to provide debt collection services with large coverage.
ส่วนที่ 2 หน้า
2.1.4.2 Collection Procedure - Phone calls
SAM proceeds with debt collection on customers who default on loan repayment from one installment period onwards. SAM’s clients will send lists of targets. The first collection step involves phone calls, with conversation recorded. In case the telephone conversation between SAM’s staff and a debtor becomes more violent, a senior staff with more experience will take over the conversion and continues to negotiate with the debtor.
- Enforcement of collaterals
In case, a client hires SAM to proceed with enforcement of collateral, the company will have to locate debtor and the collaterals. After that, the company will send details of the debtor to the branch located the nearest to the debtor. Then, the branch staff will proceed with enforcement of collateral; all practice is carried on under the scope of law.
2.1.4.3 Market and Competition 1) Industry
Due to economic slowdown, there have been a large number of debtors who default on their obligation to repay loan. Most lending providers have limited resources and networks for debt collections; hence, there is some room in the industry. A company with extensive networks and experienced personnel may be able to become a player in this industry.
2) Competition
Many debt collection companies and law firms have competed in the industry; therefore, the competition is rather intense. However, with its extensive branch networks across the country, SAWAD can enjoy cost advantages over its peers.
3) Characteristics and target customers
The Company has highly experienced staff working on collection of both secured and unsecured debts. Hence, the Company’s customer targets include retail loan lending providers (both for secured and unsecured loans), financial institutions, leasing companies, auto companies, and etc.
ส่วนที่ 2 หน้า
4) Competitive strategies
With highly experienced debt collection staff as well as nationwide branch network, the Company is able to work on debt collection in prompt manners. The staff is very well trained and can negotiate with debtors, under the scope of law.
5) Pricing Policies
The Company does not have a policy to cut prices but it rather examines the prices on a case – by-case basis, depending on the degree of difficulty and collateral. The service fee is based on the success of each collection order.