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China’s PBOC Braces for New Year Cash Demand With Loan Rollover

The People’s Bank of China rolled over a 269.5 billion yuan ($43.4 billion) lending facility to banks and added 50 billion yuan in loans as it seeks to ease liquidity ahead of the Chinese New Year holiday.

The facility, first issued in October with an interest rate of 3.5 percent, was rolled over to keep the money market stable, the central bank said in a statement on its official microblog account. It said the move also aims to smooth liquidity before the holiday, which begins Feb. 18.

The PBOC has sought to shore up liquidity and broaden stimulus efforts in recent months, cutting the benchmark lending rate in November and issuing billions of yuan in short- and medium-term loans to banks. Each year around this time, demand for yuan starts to spike as Chinese give each other red envelopes full of cash for the Lunar New Year holiday.

“There may be some irregular capital inflow and outflow around the world,” PBOC Governor Zhou Xiaochuan said at a World Economic Forum panel in Davos, Switzerland minutes after the central bank announcement. “That may also be a source of volatility.”

The PBOC doesn’t intend to provide too much liquidity, Zhou said in Davos.

China’s money-market rate climbed the most in a month today amid speculation banks will start hoarding funds to meet demands for cash. The central bank hasn’t conducted open-market operations since November. Last month, the PBOC reportedly rolled over part of a separate 500 billion yuan lending facility.

To contact Bloomberg News staff for this story: Xin Zhou in Beijing at xzhou68@bloomberg.net

To contact the editors responsible for this story: Malcolm Scott at mscott23@bloomberg.net Nicholas Wadhams

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[…]

No fresh loans to SpiceJet, says State Bank of India

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State Bank of India is not looking at extending any loan to the cash-strapped airline SpiceJet, Chairperson Arundhati Bhattacharya said today.Stating that the bank does not have any exposure to the airline, she said: “We just have two current accounts with the airline and the bank is not looking at giving any fresh loan to the carrier.”Earlier this week, the Civil Aviation Ministry had said it may request Indian banks/financial institutions to extend loans of up to Rs 600 crore to the airline.A Ministry release had also that it would request the Finance Ministry to permit external commercial borrowing (ECB) for working capital as special dispensation.On rupee volatility, she said it came only a few days ago and she needs to watch out how long it lasts.On whether the bank is worried over unhedged corporate loan exposure due to the ongoing rupee volatility, she said “at this time no need to press the panic button.” “We always ask our clients to hedge but no one hedges completely. Hopefully all our clients have sensibly hedged what are the immediate requirements,” she told reporters on the sidelines of launching tech-learning centres for customers.She said the move is aimed at empowering the customers through technology and awareness of its tech channels amongst customers. The bank will be launching 385 such centres across the country, she added.The first centre was launched by Reserve Bank Deputy Governor H R Khan here this evening.She said by March 2015, there is a plan to install 4,000 additional cash-recyclers which serve the twin purpose of cash deposit and withdrawal. With these installations, the State Bank Group will have a network of 52,791 ATMs, CDMs, cash recyclers.She said that around Rs 44 crore worth of transactions happen at RBI every month out of which Rs 37 crore are generated manually.
“Out of the Rs 37 crore transactions, 65 per cent take place on alternative channels like ATMs, mobile banking and the Internet. We aim to increase it to 85 per cent in the next one year,” Bhattacharya said.
[…]

Payday lender ACE Cash Express is hit with a $10M fine


Payday lender ACE Cash Express is hit with a $10M fine

28th July 2014 · 0 Comments

By Charlene Crowell
NNPA Writer

(NNPA) – For the second time in as many years, the Consumer Financial Protection Bureau (CFPB) has fined a major payday lender. On July 10, Director Richard Cordray announced that one of the nation’s largest payday lenders, ACE Cash Express, will pay $10 million in restitution and penalties for directing its employees to “create a sense of urgency” when contacting delinquent borrowers. This abusive tactic was used to perpetuate the payday loan debt trap.

CFPB has ordered ACE Cash Express to provide consumers with $5 million in refunds and the same amount in penalties for its violations. The firm operates in 36 states and in the District of Columbia with 1,500 storefronts, 5,000 associates and online loans.

“We believe that ACE’s aggressive tactics were part of a culture of coercion aimed at pressuring payday borrowers into debt traps,” said Cordray. “Our investigation uncovered a graphic in ACE’s training manual that lays out a step-by-step loan and collection process that can ensnare consumers in a cycle of debt. When borrowers could not pay back their loans, ACE would subject them to illegal debt collection threats and harassment.”

Commenting on CFPB’s actions, Mike Calhoun, president of the Center for Responsible Lending, said, “This enforcement action also confirms what our research found long ago: payday lenders depend on keeping vulnerable consumers trapped in an endless cycle of debt of 300-400 percent interest loans. . . .It’s real, it’s abusive and it’s time to stop.”

CRL research shows that payday loans drain $3.4 billion a year from consumers. Further, CRL has long held that the payday industry preys on customers who cannot repay their loans.

Now, with CFPB releasing an item from ACE Cash Express’ training manual, that contention is proven to be true. The ACE graphic shows how the business model intends to create a debt cycle that becomes increasingly difficult to break and urges its associates to be aggressive.

Across the country, the South has the highest concentration of payday loan stores and accounts for 60 percent of total payday lending fees. Missouri is the only state outside of the South with a comparable concentration of payday stores.

Last year, another large payday lender, the Fort Worth-based Cash America International, faced similar enforcement actions when CFPB ordered it to pay $5 million in fines for robo-signing court documents submitted in debt collection lawsuits. Cash America also paid $14 million to consumers through one of its more than 900 locations throughout the United States, Mexico and the United Kingdom.

On the same day that the CFPB’s enforcement action occurred, another key payday- related development occurred.

Missouri Gov. “Jay” Nixon vetoed a bill that purported to be payday reform. In part, Gov. Nixon’s veto letter states, “allowing payday lenders to charge 912.5 percent for a 14-day loan is not true reform. . . Supporters point to the prohibition of loan rollovers; but missing from the legislation is anything to address the unfortunately all-too-common situation where someone living paycheck-to-paycheck is offered multiple loans by multiple lenders at the same time or is encouraged to take out back-to-back loans from the same lender. . . .This bill cannot be called meaningful reform and does not receive my approval.”

Speaking in support of Gov. Nixon’s veto, Pastor Lloyd Fields of Kansas City added, “The faith community applauds Governor Nixon’s moral leadership in holding lawmakers to a higher standard on payday lending reform. Missourians deserve nothing less.”

On the following day, July 11, the Federal Trade Commission (FTC) fined a Florida-based payday loan ‘broker’ $6.2 million in ill-gotten gains. According to FTC, the firm falsely promised to help consumers get payday loans. After promising consumers to assist them in securing a loan in as little as an hour, consumers shared their personal financial data. However that information was instead used to take money from consumers’ bank accounts and without their consent.

Speaking on behalf of the FTC, Jessica Rich, director of FTC’s Bureau of Consumer Protection, said, “These defendants deceived consumers to get their sensitive financial data and used it to take their money. The FTC will continue putting a stop to these kinds of illegal practices.”

Looking forward, CFPB’s Cordray also sees a need to remain watchful of payday developments.

“Debt collection tactics such as harassment and bullying take a profound toll on people – both financially and emotionally”, said Cordray. “The Consumer Bureau bears an important responsibility to stand up for those who are being wronged in this process.”

This article originally published in the July 28, 2014 print edition of The Louisiana Weekly newspaper.

[…]

Payday lender ACE Cash Express is hit with a $10M fine | New …


Payday lender ACE Cash Express is hit with a $10M fine

28th July 2014 · 0 Comments

By Charlene Crowell
NNPA Writer

(NNPA) – For the second time in as many years, the Consumer Financial Protection Bureau (CFPB) has fined a major payday lender. On July 10, Director Richard Cordray announced that one of the nation’s largest payday lenders, ACE Cash Express, will pay $10 million in restitution and penalties for directing its employees to “create a sense of urgency” when contacting delinquent borrowers. This abusive tactic was used to perpetuate the payday loan debt trap.

CFPB has ordered ACE Cash Express to provide consumers with $5 million in refunds and the same amount in penalties for its violations. The firm operates in 36 states and in the District of Columbia with 1,500 storefronts, 5,000 associates and online loans.

“We believe that ACE’s aggressive tactics were part of a culture of coercion aimed at pressuring payday borrowers into debt traps,” said Cordray. “Our investigation uncovered a graphic in ACE’s training manual that lays out a step-by-step loan and collection process that can ensnare consumers in a cycle of debt. When borrowers could not pay back their loans, ACE would subject them to illegal debt collection threats and harassment.”

Commenting on CFPB’s actions, Mike Calhoun, president of the Center for Responsible Lending, said, “This enforcement action also confirms what our research found long ago: payday lenders depend on keeping vulnerable consumers trapped in an endless cycle of debt of 300-400 percent interest loans. . . .It’s real, it’s abusive and it’s time to stop.”

CRL research shows that payday loans drain $3.4 billion a year from consumers. Further, CRL has long held that the payday industry preys on customers who cannot repay their loans.

Now, with CFPB releasing an item from ACE Cash Express’ training manual, that contention is proven to be true. The ACE graphic shows how the business model intends to create a debt cycle that becomes increasingly difficult to break and urges its associates to be aggressive.

Across the country, the South has the highest concentration of payday loan stores and accounts for 60 percent of total payday lending fees. Missouri is the only state outside of the South with a comparable concentration of payday stores.

Last year, another large payday lender, the Fort Worth-based Cash America International, faced similar enforcement actions when CFPB ordered it to pay $5 million in fines for robo-signing court documents submitted in debt collection lawsuits. Cash America also paid $14 million to consumers through one of its more than 900 locations throughout the United States, Mexico and the United Kingdom.

On the same day that the CFPB’s enforcement action occurred, another key payday- related development occurred.

Missouri Gov. “Jay” Nixon vetoed a bill that purported to be payday reform. In part, Gov. Nixon’s veto letter states, “allowing payday lenders to charge 912.5 percent for a 14-day loan is not true reform. . . Supporters point to the prohibition of loan rollovers; but missing from the legislation is anything to address the unfortunately all-too-common situation where someone living paycheck-to-paycheck is offered multiple loans by multiple lenders at the same time or is encouraged to take out back-to-back loans from the same lender. . . .This bill cannot be called meaningful reform and does not receive my approval.”

Speaking in support of Gov. Nixon’s veto, Pastor Lloyd Fields of Kansas City added, “The faith community applauds Governor Nixon’s moral leadership in holding lawmakers to a higher standard on payday lending reform. Missourians deserve nothing less.”

On the following day, July 11, the Federal Trade Commission (FTC) fined a Florida-based payday loan ‘broker’ $6.2 million in ill-gotten gains. According to FTC, the firm falsely promised to help consumers get payday loans. After promising consumers to assist them in securing a loan in as little as an hour, consumers shared their personal financial data. However that information was instead used to take money from consumers’ bank accounts and without their consent.

Speaking on behalf of the FTC, Jessica Rich, director of FTC’s Bureau of Consumer Protection, said, “These defendants deceived consumers to get their sensitive financial data and used it to take their money. The FTC will continue putting a stop to these kinds of illegal practices.”

Looking forward, CFPB’s Cordray also sees a need to remain watchful of payday developments.

“Debt collection tactics such as harassment and bullying take a profound toll on people – both financially and emotionally”, said Cordray. “The Consumer Bureau bears an important responsibility to stand up for those who are being wronged in this process.”

This article originally published in the July 28, 2014 print edition of The Louisiana Weekly newspaper.

[…]

Gov. Nixon vetoes payday loans bill, saying it won't protect …

KANSAS CITY, Mo. – Missouri Governor Jay Nixon vetoed Senate Bill 694 on Thursday, saying it was false hope for true reform of payday loan company policies.

The bill would, in some cases, cap the interest rate at 35 percent for borrowers. However, on short-term loans the interest rate would skyrocket.

On a 14-day loan, the interest rate would be allowed to increase to more than 900 percent if it’s stretched out over one year. The bill would also allow borrowers to get multiple loans from multiple companies at once.

For those reasons, Gov. Nixon called the bill a sham effort and said it won’t protect Missourians from the downward spiral into debt.

Metro man Elliott Clark, who lost his home after taking out payday loans, applauds the governor’s decision, while the bill sponsor says this bill was at least a step in the right direction.

Smoking ribs and getting ready for a family reunion, Clark is totally in his element. For him, taking care of his family is priority number one.

“My pride would not let me let my family do without. Nobody in their right mind does,” he said.

Clark has children he sent to college, he’s a Marine, a Vietnam-era veteran, and he was happy with his simple but good life.

“We were doing okay until my wife fell and broke her ankle in three places,” he explained.

Thirty-five thousand dollars in medical bills forced him into seeking about $2,500 in payday loans.

“Over the course of five years, that’s how long I had these loans, I wound up paying $30,000 in interest,” he said.

Clark spoke out against current payday loan policies, and he supports Gov. Nixon’s veto of Senate Bill 694.

The bill would prohibit payday lenders from giving multiple loans to the same person, unless that person went to several different companies. The governor said that would only prolong the cycle of debt.

Senator Mike Cunningham, a Republican from the Springfield area, sponsored the bill. He says it capped most interest rates at 35 percent, as reform advocates wanted. Senator Cunningham says the bill also would have allowed borrowers to have an extended payment plan for their first loan from a company, which he believes would have helped.

But Clark says the bill wasn’t strong enough to protect people like him, just trying to do the best he can.

[…]

Gov. Nixon vetoes payday loan bill, says it is not 'meaningful reform'

Governor Jay Nixon (D) has vetoed legislation aimed at restricting payday loans, dismissing the bill as not being true reform.

“Senate Bill No. 694 provides false hope of true payday lending reform while in reality falling far short of the mark,” writes Nixon in his veto message.

The bill would prevent consumers from taking out new short-term loans, as can happen under six times under current law, with interest continuing to accumulate. It would also require that once a year, lenders offer extended 60- to 120-day payment plans to borrowers, free of additional interest or fees.

The bill would also cap interest fees on loans at $35 for every $100 in principal. The current cap is 75-percent of the original principal.

Nixon writes the bill, “fails to protect consumers and fails to prevent the cycle of debt that payday lending perpetuates.” Instead, he says the bill, “appears to be part of a coordinated effort by the payday loan industry to avoid more meaningful reform.”

See the legislation, SB 694

The bill passed both legislative chambers by margins wide enough to overturn Nixon’s veto, if enough lawmakers would vote the same way.

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[…]

RBA's stance actually not very stimulatory

WITH all the talk about the record low cash rate, you could be excused for thinking monetary policy is giving the economy a massive boost.

BUT it isn’t.

While the current cash rate is the lowest on record, interest rates generally are not. By the time the RBA’s board meets again next month, the cash rate will have been at 2.5 per cent for two days shy of a year. The statement from RBA governor Glenn Stevens after the meeting on Tuesday made it clear it’s not budging. “On present indications, the most prudent course is likely to be a period of stability in interest rates,” the RBA said. In 55 years covered by records going back to 1959, the cash rate has never been much below three per cent on a sustained basis. So the current sub-three per cent stretch, beginning with a cut from 3.00 per cent to 2.75 per cent in May 2013, is unique. But so was the global financial crisis. It changed the way banks fund their loans and price risk, and prompted new rules making funding more expensive, widening the gap between the cash rate and lending rates. In the decade before money markets went haywire in mid-2007, the gap between the cash rate and banks’ standard variable rate home loan rates averaged 1.8 percentage points. It’s now nearly 3.5. For businesses loans it’s even worse. Before the crisis, the gap between cash and the small business unsecured overdraft rate averaged 3.3 percentage points, according to RBA data. It’s now close to 6.5 points. So, while the cash rate is now 2.7 percentage points below its pre-crisis average, the standard home loan is only about one percentage point below and the small business overdraft is actually higher by nearly half a percentage point. Sure, monetary policy “remains accommodative”, as the RBA’s statement reassured us. But the accelerator is not pressed all the way to the floor. And, considering the fading mining investment boom, tight budget policy, slow wages growth and the high Australian dollar, the chances are that the RBA’s “period of stability” will last quite a few months yet. In fact, the risk that these negatives will not only delay the economy’s eventual return to normal growth but depress it further has not been lost on the futures market. The market has priced the cash rate at slightly less – that’s right, less – than 2.5 per cent right through until mid-2015. That’s not to say the market expects a cut. But it is an acknowledgement that if there is a move in the cash rate over the coming few months, it is more likely to be a cut than a hike, as the RBA fears its policy stance is not doing enough to lift the economy out of its rut.

Originally published as RBA’s stance actually not very stimulatory […]

Why are Senate DFLers blocking the toughest payday loan …

This article is one in a series of occasional articles funded by a grant from the Northwest Area Foundation.

Efforts to crack down on payday loans in Minnesota could again be headed to “Wait’ll-next-year’’ status.

Yes, the Minnesota House has passed a bill that would put tougher restrictions on operations that charge the state’s poorest interest rates of 250 percent-plus.

And yes, the governor on Monday tried to shed more light on the business practices that operate in the shadows of decency.

“I urge the Senate to put the House bill to a vote and see whether legislators of both parties are willing to stand up to protect the interests of the people of Minnesota, rather than the economic interests of payday lenders,’’ the governor said from his bully pulpit.

The House bill more strictly limits payday lenders’ repeat business, with tougher checks on borrowers’ ability to repay.

But even with a weaker Senate bill, Deputy Majority Leader Jeff Hayden is having a hard time rounding up votes.

“It’s bogged down,’’ said the Minneapolis DFLer. “The industry is fighting anything we try to do.’’

This is one of those baffling issues. Why is it so difficult to put tougher restrictions on an industry that seems to have a strong odor? Why does Minnesota continue to protect business practices numerous states outlawed and the Department of Defense condemned? Why has this issue become partisan, with virtually no Republicans supporting clamping down on the industry?

Or is it really that partisan, when you look at campaign contributions?

Soaring business, soaring traps

A MinnPost series last year underscored the industry’s growth. Between 2007 and 2011, payday loans in Minnesota skyrocketed from 170,000 to 350,000 annually, totaling almost $100 million. The state’s biggest payday loan company, Payday America, pocketed $6 million in 2011 payday profits.

In House committee testimony this session, Anna Brelje told her story to explain how the process works — and exploits.

She was 24 years old, had a medical crisis (no insurance) and ended up in debt. Even working fulltime, she couldn’t keep up with her bills. She borrowed $300 through a payday loan operation, couldn’t pay it back in two weeks, so next payday borrowed again to pay back the first loan.

Sen. Jeff Hayden

“I ended up trapped,’’ she said; in a two-year period, she paid more than $2,500 in fees.

Out of the trap now thanks to a decent job, Brelje became a leader in the fight against the practices. She’s also involved her Minneapolis church, Holy Trinity Lutheran.

Several religious organizations have also pushed legislators to act.

In some ways, this seems like a classic case of those with the greatest needs having the least Capitol clout.

Rep. Joe Atkins, DFL-Inver Grove Heights and commerce committee chairman, shakes his head at the situation.

“The people that get caught up in these traps are not stupid people,’’ Atkins said. “They’re people who are just desperate and they’re struggling to get by. Everyone else gets protected.’’

But Sen. David Hann, the Senate minority leader, sees things differently. Tighter restrictions on the payday loan operations might end up hurting the very people they intend to help.

“I don’t know what side the angels are on in this situation,’’ Hann said. “As I understand it, the people who are using these mechanisms to borrow money can’t avail themselves of traditional ways. These are mechanisms are a way to get a loan. There are people who don’t have means to get credit elsewhere. There has to be an accommodation.’’

Rixmann: GOP power, DFL donor

Let’s take time out to deal with a rumor that floats around the Minnesota payday loan issue:

Brad Rixmann is founder and CEO of Pawn America, which owns Payday America. Rixmann also is a major player in Republican Party politics. He is a big donor. He was an honorary chairman of Tom Emmer’s gubernatorial campaign.

That leads to the rumor that Rixmann has heavy influence on the Republican House and Senate caucuses.

Hann says Rixmann’s name never has come up during caucus discussions of payday-loan crackdown efforts.

Pawn America

Brad Rixmann

Still, Hann was asked, given that GOP legislators frequently say unions shape DFL policies, isn’t it reasonable to suggest outside influences shape GOP policies?

“Frankly, when you talk about an individual donor, it doesn’t compare to the magnitude of a union,’’ Hann replied. “When you talk about a union, you’re talking about both money and people on the ground. There is no individual contributor who can compare to that.’’

Rep. Tim Sanders, R-Blaine, is a member of the House commerce committee and a bill foe.

The Rixmann influence? “His name hasn’t come up,’’ Sanders said.

But Republicans don’t control the Legislature — Democrats do. They could pass any bill on their own. Why don’t they?

Well, as long as we’re talking Rixmann donations, know this:

In 2013, Rixmann gave $10,000 to the DFL Senate Caucus, $5,000 to the DFL House Caucus, $500 to the 52nd Senate District DFL, and $4,000 to Gov. Dayton, according to the Campaign Finance and Public Disclosure Board.

While the funds obviously didn’t buy Dayton’s or the House’s support, Senators might have some explaining to do about their fifth-largest 2013 individual contributor. Rixmann also gave the Senate DFL an additional $24,750 between 2006 and 2012, according to the CFPDB.)

Understand, Rixmann was more generous with Republican causes. Still, his name is known — if not mentioned in caucus sessions — among DFLers as well as Republicans.

Cap doesn’t mean ‘need is just going away’

Rixmann was not available for comment. But Chuck Armstrong, chief legislative officer for Rixmann Companies, did explain why the business is blocking legislative efforts to cap how many annual loans a customer could take out.

The House bill’s main portion would prevent a customer from getting more than four loans a year. The weaker Senate version would cap that at eight. The House also requires tougher credit-worthiness checks.

Rep. Joe Atkins

But the big issue is the caps — payday lenders count on repeat borrowers. And some of those borrowers testified that they repeatedly count on payday lenders.

“To cap it doesn’t mean the need is just going to go away,’’ Armstrong contends.

Currently, most of Payday America’s 20,000 customers use the service more than eight times in a year, he said. Payday America, at least, allows customers to take out only one loan at a time, he adds.

Armstrong admits that, on the surface, it’s easy to paint a bleak picture of the operations such as Payday America. But, he said, despite statistics showing people paying more than 200 percent interest on loans, the majority of Payday America’s customers pay back their loans in two weeks.

“If you borrow $350 and you pay it back in two weeks, it’ll cost you $35,’’ he said. “Our customers are very deliberate in their decisions. … Our customers love us.’’

(The state’s Department of Commerce reported that in 2011, Minnesotans using payday loans paid fees and other costs for loans that amounted to an interest rate of 237 percent. These institutions get around the state’s tough usury laws because they are licensed as Industrial Loan and Thrift operations, not payday lenders. This is what is called a big loophole.)

During the session, Armstrong said, Payday America customers sent 10,000 e-mails and letters to legislators urging them to oppose the proposed restrictions. On the company’s website, there is an invitation for customers to urge legislators to block proposed changes.

The opposition’s trump card is that if the Legislature did pass the proposed restrictions, the licensed lending business might be forced to close. That would mean the only avenues for loans would be via the Internet or on from street corner loan sharks.

“The real danger is the Internet,’’ Armstrong said. “There are Internet predators. We’re a brick-and-mortar, licensed business.’’

Refusing to stop the ‘terrible treadmill’

With time running out, it appears that those lobbying to stop legislative action hold the stronger hand.

“The whole point of what we’re trying to do is get people off that terrible treadmill where they keep borrowing to pay back an earlier loan,’’ Hayden said.

But just to get the Senate version of the bill through the Senate commerce committee, headed by James Metzen, an old DFLer long known for being friendly to anything associated with banking, Hayden had to water down his bill.

“The Senate is just more conservative,” Hayden said.

Will the measure get off the floor? On Monday, several people pushing for legislative action met briefly outside the Senate chamber with majority leader Tom Bakk.

What was said?

“He told us they still don’t have the votes,” said Meghan Olsen Biebighauser, a Holy Trinity organizer who helps lead religious opposition to payday lending.

Someone else in the group said, “Don’t you think he could get the votes if he really wanted them?”

[…]

Payday loan bill scrapes through House 35-34 | Idaho Business …


Payday loan bill scrapes through House 35-34

by The Associated Press

Published: March 18,2014

7:48 am Tue, March 18, 2014

A bill seeking to let Idaho dictate how much payday lenders can give borrowers passed the House March 17 by only one vote.

The 35-34 decision came after several lawmakers said they had issues with the bill, which limits loan size and lets borrowers set up interest-free payment plans if they hit a financial snag.

Boise Democrat Rep. Phylis King said letting borrowers take out loans of up to 25 percent of their monthly income was still too much, suggesting the amount be closer to 5 percent.

Others worried loan-seekers could circumvent the parameters by visiting multiple lenders in one day.

Proponents say it gives breathing room to borrowers when unexpected financial woes prevent them from returning the money.

Idaho’s governor will now decide whether to sign the measure into law.


Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. <</span> >


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[…]

Banks fear lower loan growth

Anuwat Luengtawekul, chief financial officer of Thanachart Bank, said it was monitoring the political unrest to see how seriously it affects its customers. The bank will wait a month or two before deciding whether to revise its loan-growth targets.

Currently, TBank targets loan growth of 6-7 per cent this year.

He said the political tension was affecting corporate and retail customers’ loan demand. The delinquency rate has a high chance of increasing.

“We have to work together with our customers to help them get through tough times. Furthermore, we have to improve some segments where we have little market share, such as mortgages and SMEs [small and medium-sized enterprises]. In those areas that are unable to drive loans, we will focus on fee income such as from cash management,” he said.

The bank has short- and long-term plans to maintain growth.

“We are looking after our operating costs as a short-term plan. If the political unrest continues even after the general election, the bank will consider adjusting its business plan,” he said.

Adisorn Sermchaiwong, senior executive vice president at CIMB Thai Bank, acknowledged that the political unrest had seriously affected its retail lending, especially personal loans and mortgages. It is considering lowering its projection of new loans in those two categories after the general election.

Earlier, CIMB Thai projected new personal loans of nearly Bt10 billion, but after one month of the new year, he believes they might not pass last year’s figure of between Bt8 billion and Bt9 billion.

The bank has increased the frequency of debt collection after the delinquency rate of personal-loan customers climbed by 1-2 per cent. At present, the rate of non-performing loans in the personal-loan segment at CIMB Thai is 2-3 per cent.

Wealth products

To maintain growth in the retail-banking sector, CIMB Thai is chasing fee income by promoting wealth products to its customers.

Adisorn said the political uncertainty had affected deposit mobilisation in the first month |of this year, but the bank would launch further campaigns for deposit products as this would lead to cross-selling.

“We aim to launch a 24-month time deposit with the possibility [of an interest] rate of more than 3 per cent [per annum]. The long period is to ensure that the customers stay with the bank until we can offer other products,” he said.

Meanwhile, the state-owned bank Government Savings Bank may also cut its loan-growth target as the prolonged political unrest hits public investment.

GSB president Worawit Chalimpamontri said the bank forecast that lending this year was unlikely to reach previous projections, especially state and corporate loans, which have slowed after the dissolution of Parliament.

At the end of last year, the bank projected deposit and loan growth in 2014 of 1.5 times gross domestic product, while projecting |GDP growth of 4 per cent. Worawit said it now appeared that GDP growth would be dragged down, and its loan growth would decline as well. However, the |bank will evaluate the overall economy again before revising |its growth targets next quarter.

GSB has projected new loans of between Bt80 billion and Bt90 billion this year.

In general, the bank targets loans for state projects at 20 per cent of total new lending, but it will try to shift its focus to other segments as it is not confident of the political direction or when the new government will be formed after the election, he said.

Indicators presage an economic slowdown this year. Bank of Thailand Governor Prasarn Trairatvorakul has suggested GDP growth could be below 3 per cent. Meanwhile, exports and private investment are unlikely to recover from 2013 levels.

Worawit said GSB would set higher loan-loss provisions than last year given the high risks the country is facing, and these higher provisions could pull down its profits as well.

Last year, GSB showed profits after loan-loss provisions of Bt22 billion, while non-performing loans were 1.14 per cent of the total.

[…]