Expanded Loans

Regulatory Reforms and Expanded Loans Scope Thailand’s pico-finance sector, which is a formal micro-lending program launched in 2017, is undergoing significant regulatory changes. This is about the expanded loans scheme. Originally designed “to broaden access to formal financial sources for small-scale borrowers and to encourage informal creditors to operate legally,” pico-finance licenses have since been issued to hundreds of village-level loan providers. By mid-2025, there were approximately 1,155 licensed pico-finance operators active. This is spread across 75 of Thailand’s 77 provinces. This article covers expanded micro credit or expanded micro loans.

Together, they have approved over 5 million loan accounts. This totals more than THB 50 billion. These licensed firms make small personal loans (often secured by assets) to rural customers who lack access to traditional banking. New rules announced in mid-2025 would let licensed pico-finance firms lend beyond their home province. The Finance Ministry’s revised plan (currently under consultation) would allow qualified firms to serve borrowers in immediately adjacent provinces. For example, a lender based in Chiang Mai could also extend loans into neighboring provinces like Chiang Rai or Lampang. Under the proposal, only. Likewise this is the expanded loans system the Pico Plus.

“Pico Plus” operators – those with robust risk-management systems and at least THB 10 million in paid-up capital would. These firms could then lend up to THB 100,000 per borrower in the newly permitted, doubling the current per-person loan limit (which is typically THB 50,000 under the old rules). In practical terms, the Finance Ministry’s guidelines specify that eligible operators must adopt comprehensive risk controls – including customer identification procedures, formal collection and repayment tracking, reminder systems for debtors, and strict loan-approval criteria – before expanding geographically. 

Eligibility: Lenders must hold a “Pico Plus” license with ≥ THB 10 million paid-up capital and a formal risk-management plan. ·

Geographic scope: Lending allowed in the licensed firm’s home province plus adjacent provinces (previously only the home province). · Loan size: In the expanded area, loan amounts are capped at THB 100,000 per borrower. ·

Risk controls: Firms must implement robust credit controls: verifying borrower identity, managing installment collection, sending reminders to repay, and applying clear credit approval.

These adjustments mark a departure from the former restriction that each pico-finance licensee lend only within one province. The Ministry is revising its ministerial announcement to formalise the expanded service area, and the draft rules will undergo public consultation before final approval by the finance minister. If enacted, the rules would officially permit cross-border lending in Thailand’s micro-credit network while maintaining oversight of loan quality and borrower protection. This is under the Pico Plus scheme which is a  expanded loans scheme. 

The rationale for relaxing geographic limits is to improve credit access and system liquidity, especially in border or remote communities. Finance officials emphasis convenience for borrowers near provincial lines: Deputy Minister Julapun Amornvivat noted that people “living at the edges of provincial boundaries” would find it easier to reach a loan provider in a neighboring district than one farther away in their licensed province.

By broadening the lending reach of local microfinance firms and expanded loans, policymakers aim to make formal loans more accessible to rural border-area borrowers who currently face obstacles reaching a licensed lender. In theory, this could help stand in for absent bank branches or fill gaps left by informal moneylenders.

A related goal is to draw informal lenders into the formal sector. Thailand’s rural credit markets still have unregulated “loan sharks” serving village customers. By allowing licensed pico-finance firms to enter new districts and expand their client base, authorities hope some informal lenders will switch to the legal framework to compete, “offering loans lawfully under the supervision of the Finance Ministry”. In other words, a broader geographic scope could make the pico-finance license more attractive and help convert black-market lending into monitored loans especially the expanded loans. 

As the National Thailand report explains, the expanded scope is intended “to serve small-scale borrowers better” and bring more operators under regulation. The Finance Ministry also anticipates that enabling inter-provincial lending will alleviate liquidity issues facing pico-finance firms. Industry data show that the sector has grown rapidly (over THB 50 billion issued), but it now struggles with high household debt and non-performing loans. Loosening geographic limits is seen as a way to keep credit flowing: lenders with good track records can deploy capital to new areas where demand exists. As one TDRI summary notes, the changes aim to “expand service accessibility and address liquidity issues faced by operators”. These are expanded loans. This article covers expanded micro credit or expanded micro loans.

Greater credit access: More borrowers near provincial borders gain access to formal microloans. · 

Financial inclusion: 

This helps encourage more informal lenders to become licensed. · 

Increased liquidity: 

The well-capitalised pico-finance firms can tap new markets. The Finance Ministry argues that this gain in new customers will help improve overall financial inclusion for low-income and rural Thais. By doing this, it is helping to build on the pico-finance program’s original mission. Now to expanded loans in the scheme. 

Industry Impact and Consolidation Risk.

Even as the reform promises broader credit. Many analysts have warned that it may reshape the pico-finance industry’s structure. From the beginning of the program’s inception. The pico-finance sector grew quickly. As of March 2025, about 1,414 licenses had been issued. The problem, however, is rising household debt and the economic slowdown. This has caused many small operators to face repayment pressures. Over 100 licensed firms have already surrendered their licenses due to loan defaults and business difficulties. While the Finance Ministry reassures that license cancellations have been consistently outnumbered by new issuance, the trend raises questions about market stability.

Figure: Pico-Finance sector snapshot (2017–June 2025). It shows key statistics: ~1,414 total licenses issued, of which about 106 surrendered; ~5.08 million loans approved. Likewise with ~THB7.43 billion in outstanding balance. It underscores the rapid growth and current scale of the sector, but also its vulnerabilities as noted by experts. Concerns centre on market consolidation.

TDRI senior fellow Nonarit Bisonyabut cautions that the new area rules will favour larger, well-funded operators. In his analysis, “inter-provincial lending might transform the market structure” by increasing competition across regions. Larger firms can more easily meet the new capital and compliance requirements, while smaller village lenders may find it hard to upgrade systems or absorb the higher costs. Nonarit explicitly warns that many small operators could be “forced out” or merge with bigger ones to survive. In short, fewer, larger lenders would dominate the expanded market.  Thus increasing the expanded loan scheme. 

Exits of small players: Already, some pico-finance businesses have returned licenses due to economic strain. Stricter lending criteria and cross-border competition may push more to quit. · Competition and compliance: Smaller rural lenders may struggle to meet the new risk-management mandates, putting them at a disadvantage against larger firms. · Consolidation: The market may concentrate into bigger players. Nonarit notes that allowing operations across provinces “could lead to the consolidation of the Pico Finance industry”. This means surviving firms could merge or expand rapidly, rather than in a diverse, small-scale market. · Persistent credit risks: Expanding geography alone won’t eliminate bad loans. This article covers expanded micro credit or expanded micro loans.

Many underlying drivers of default (high household debt, economic weakness) are national issues. TDRI points out that cross-border lending “may not necessarily reduce risks, as the issues faced…tend to be similar across regions”. In other words, simply serving a wider area doesn’t make borrowers more creditworthy. TDRI recommends supporting measures alongside the reform – such as improved borrower data systems and stronger debt-collection laws – to help the industry cope. Without such support, the revised regulations could accelerate the exit of vulnerable lenders. The Finance Ministry, however, contends that the overall number of active lenders is still growing (1,155 active as of May 2025) and that official NPL rates have improved slightly. 

The rural pico-finance firms – often small local companies serving villages – will feel the reform’s effects most directly. On the one hand, the changes offer new opportunities. A lender in a remote district could potentially reach clients just over the provincial line, expanding its customer base. For rural borrowers, this means one more formal option.

As Deputy Minister Julapun noted, the goal is to let people at “the edges of provincial boundaries” borrow from nearby operators. In practice, this could ease access: for example, a farmer living on the border of Chiang Mai and Chiang Rai might visit a Chiang Mai–licensed branch instead of waiting for approval from a distant Chiang Rai lender. The expanded scope thus has the potential to improve convenience and credit flow in sparsely served areas. This increases the expanded loans on book. 

On the other hand, smaller rural lenders face risks. By definition, only better-capitalised firms (the “Pico Plus” operators) can stretch into adjacent provinces. Many tiny village companies may not meet the THB 10m capital or have sophisticated risk systems, so they remain confined to their home base. Meanwhile, bigger firms or urban-backed lenders might establish branches or agents in new regions, directly competing with the little local outfits. TDRI explicitly warns that these small-scale firms might be “squeezed out” by larger competitors under the new rules. If numerous local lenders exit, rural areas could face a thinning of formal credit outlets.

This is especially significant given the role of microfinance in rural economies. Formal pico-finance loans are intended to substitute for risky moneylenders. As one study on Thai rural finance concludes, microfinance programs “provide loans that help rural Thai households decrease their reliance on informal credit”. Thus, any retreat of formal lenders risks pushing borrowers back toward unregulated sources. If local pico-finance operators shut down, villagers might have no convenient licit lender and resort again to informal loans (often at much higher interest).  In summary, for rural micro-lenders and communities, the outcome is mixed. Especially when it comes to expanded loans. 

The rules could raise access by letting some lenders cross borders, but they also impose higher standards that may overwhelm the smallest firms. The net effect depends on how many small lenders adapt or are acquired. Industry analysts stress that authorities and local observers must monitor these developments. Policymakers may need to ensure that consolidation doesn’t leave isolated areas without any formal credit source. 

Thailand’s proposed reforms for the pico-finance sector represent a major shift in microcredit regulation. By lifting provincial barriers, the Finance Ministry aims to make lending more inclusive and vibrant, particularly along provincial frontiers. If approved, eligible firms will gain new markets, possibly increasing credit flows to undeserved borrowers.

However, the changes also carry risks of industry consolidation and the displacement of small lenders. Observers note that without adequate support, some village operators may exit or merge, reducing rural communities’ lending options. For businesses and local leaders writing about these reforms, it is important to cover both sides: the mechanics of the new loan-geography rules and the intended benefits for borrowers, as well as the challenges facing existing pico-finance firms. Thus expanded loans are increased.

In particular, the implications for rural micro-lenders should be highlighted. Policymakers will need to balance the goal of broader access with measures to help small operators upgrade and compete.

In-depth coverage should stress how these rules might reshape Thailand’s microfinance landscape – for better and for worse – and what it means for villagers who rely on pico-finance loans. Sources: Official announcements and industry reports from 2025 detail these reforms and their context, providing the factual basis for the above analysis.