Pico Finance License

Thailand’s Pico Finance license is a special consumer-finance permit for small, provincial lending. It was launched in 2017 (via Finance Ministry Decree No. 58) to “formalize micro-lending” and allow licensed companies to charge interest above the normal 15%. This is the Pico Finance License for Thailand.

In practice, any business wishing to make loans (up to THB 50,000 or THB 100,000) to individuals in one province at above-15% rates must obtain this license. Licensed “pico” lenders can charge up to a 36% effective annual rate (including all fees), under strict supervision by the Ministry of Finance’s Fiscal Policy Office (FPO).

Note that there is the pico licence for the pico license for a company as well as a pico license for a partnership. 

Thai-incorporated entity: The applicant must be a Thai legal person – usually a limited company (or partnership) registered in Thailand. In other words, it must be incorporated under Thai law and able to contract in its own name.

Thai ownership: At least 50% of share capital must be held by Thai nationals. (Foreign-majority firms are effectively not eligible unless they obtain a Foreign Business license, since consumer credit is a restricted “service” under the Foreign Business Act.)

Qualified management: All directors, executives and major shareholders must meet the regulator’s “fit-and-proper” criteria. This essentially means no disqualifying criminal record (especially for fraud, embezzlement or loan-sharking) and no serious financial misconduct. The FPO checks these backgrounds during application.

Key point: The licensee must be a Thai-incorporated company (or partnership) with majority Thai ownership and honest, competent management. This is the Pico Finance License for Thailand.

Paid-Up Capital Requirements

 
· Minimum capital: A company needs at least THB 5 million paid-up capital for a standard Pico license.

  “Pico Plus” tier: For a larger license (loans up to THB 100,000), the minimum jumps to THB 10 million paid-up.

· Fully paid: Regulators insist this capital be actually contributed (not merely authorized). Applicants typically show bank statements or audited financials proving the money is in the company’s account.

Having these funds on deposit ensures the lender has real financial backing. If the paid-up capital ever falls below the threshold, the FPO can impose fines or even revoke the license. (Many licensed companies simply issue shares or shareholder loans to meet the requirement, but legally it must count as paid-in capital.) 

 
Provincial area: A Pico license only covers lending within a single province. Borrowers must reside in that province. (For example, a license in Chiang Mai Province only permits loans to Chiang Mai residents.). This is the Pico Finance License for Thailand.

Extension: As of 2025 the Finance Ministry is considering rules to allow some lenders (especially THB 10M capital “Pico Plus” firms) to also serve neighboring provinces. Until then, the in-province rule is strict.
 
Loan size: By law, each borrower can receive up to THB 50,000 under a standard license. A Pico Plus license allows up to THB 100,000 per borrower. These are per-loan/per-borrower limits, so multiple loans to the same person are still individually capped. Exceeding these amounts without the proper license is illegal.
 
Collateral: Loans may be secured or unsecured. In practice, many pico lenders require collateral (land, gold, vehicles, etc.) to mitigate risk. Secured loans often carry slightly lower interest in reality, but the law treats both secured and unsecured loans the same under a Pico license. (Crucially, collateral is optional – an operator can make unsecured micro-loans if it chooses.)
 
Excluded loans: Some loans are explicitly excluded from the Pico regime. Notably, overseas travel loans (for work abroad) and employee-welfare loans (through an employer’s program) are not treated as “pico-finance under supervision.” These categories fall under different rules.

Key point: A Pico license turns the company into a local micro-finance provider. It cannot take public deposits or offer general banking services – only the specified loan activity in its province. This is the Pico Finance License for Thailand.

36% total APR: By regulation, the total effective annual rate on a pico loan (including interest, penalties, service charges, etc.) may not exceed 36% per year. In other words, all finance charges must be converted to an APR, and that APR must be ≤36%. For example, a loan at 30% interest plus a 6% upfront fee would reach 36% APR. No combination of fees can lawfully push it higher. (All fees – late penalties, processing fees, etc. – count in the APR.)
 
Transparency: Lenders must compute and disclose the APR to the borrower. Thai law effectively aggregates all charges, so any hidden or undisclosed fee that would raise the APR above 36% is illegal. In practice, responsible lenders use a standard financial formula to ensure compliance.
 
Policy rationale: The higher 36% cap “reflects the inherently higher risk and costs” of micro-lending. (For context, ordinary consumer loans not under pico licenses are capped at 15% by the Civil Code.) Thus, a Pico license permits much higher rates than banks, but the 36% ceiling remains a hard limit to protect borrowers.

Licensed pico firms are fully regulated in several respects for the Pico Finance License for Thailand:
 
Leadership checks: The company must continue to have qualified, honest managers. Any change in the board or owners triggers a review. If someone on the management team later becomes disqualified (e.g. through a criminal conviction), the license can be suspended or revoked. Companies usually maintain ongoing vetting of their directors/shareholders to meet this requirement.
 
Periodic reporting: Pico lenders must file regular reports (financial statements, loan portfolio data, etc.) with the Ministry of Finance/FPO or appointed provincial authorities. Regulators may audit or inspect at any time. Proper accounting, internal controls and record-keeping are mandatory. Failure to report or allow inspections can result in penalties or license cancellation.
 
Anti-Money Laundering: Pico finance is explicitly subject to Thailand’s AML laws. Licensed operators must register with the Anti-Money Laundering Office, carry out customer due diligence (collect KYC documents for each borrower), monitor transactions, and report any suspicious activity. Since these loans often involve cash in rural areas, AML compliance is a major focus for regulators.

Consumer protection: All provisions of the Consumer Protection Act and related lending regulations apply. Contracts must be clear and fair. Unfair or undeclared fees can void a contract. Debt collection must follow legal methods (no harassment, no hidden interest). Regulators vigilantly protect micro-borrowers; for example, any contractual clause that would circumvent the APR cap is illegal.
 
Prudent lending: Regulators expect sound credit policies. Even without geographic expansion, a pico lender should properly assess each borrower’s ability to repay (e.g. by verifying income or collateral). For lenders aiming to expand, the FPO now requires documented risk-management plans (client ID, repayment tracking, provisioning). In short, pico operators should run credit approvals and monitoring like any other finance company. Indeed, recent data show these portfolios are very risky: roughly 23–24% of pico-finance loan balances were non-performing (NPLs) in 2025. This is the Pico Finance License for Thailand.

Key point: After licensing, the ere has to be full supervision of a pico-finance firm. It must follow all normal financial-company rules such as AML, auditing as well as the consumer law. You also need to submit to inspections as well as maintain proper lending practices. This is the Pico Finance License for Thailand.

1. Preparation of your documents: You will need to collect all corporate as well as all your financial paperwork. These include but not limited to the company registration certificate.This as well as the corporate affidavit (pracharat). Likewise you will also need the lists of shareholders and directors of the company. Finally there needs to be proof of paid-up capital. This includes the bank letter or audit report. Finally there would be the office lease and/or title deed, Lastly if available the financial statements. Likewise a detailed business plan is required. This needs to describing loan products. This is the Pico Finance License for Thailand.

These include the (size, terms as well as interest/fee schedule. You will also need to have a target customer profile, credit assessment and collection procedures. Likewise an organizational structure.

2. Submit application: Now you will need to file the completed application. You will also need to pay the fees to the Ministry of Finance (Fiscal Policy Office). Likewise to an appointed provincial finance office. Check that all fields are filled and documents attached. Only then will the regulator issue a receipt or tracking number upon filing.

3. Review: The Ministry will review your submission to ensure compliance. They will also verify the capital is in place. Likewise they will check the company’s legality, and run background checks on all the executives of the company. This review typically takes about 60 business days. The FPO may request clarifications or more documents during this period.

5. Site inspection: Regulators will also inspect the firm’s office. Inspectors will confirm that the premises exist and that the registered for business is complete. Lastly that the staff and records are present as stated. Any discrepancies such as the company not actually existing at the address can delay or scuttle approval.

5. License issuance: If all checks are satisfactory. Then the Ministry formally grants the Pico-Finance license. The license letter will specify the loan limits.Likewise it will also remind the company of the 36% rate ceiling. It remains valid indefinitely while barring revocation. (If the licensee fails to make any loans within one year, the regulator may rescind the license.)
    
   6. Post-license obligations: Upon licensing, the firm must begin lending as planned and adhere to all conditions. Licensed lenders are required to “regularly submit reports and maintain compliance with regulatory standards”. In practice, this means ongoing record-keeping, timely financial reporting, and cooperation with any audits. Violations (e.g. charging above 36% or lending outside the approved area) can lead to fines, license suspension or cancellation.

    

Current Trends and Context
 

The Pico-finance sector has expanded rapidly. As of mid-2025, about 1,155 pico-finance firms were active. These firms have cumulatively issued roughly 5.08 million loans (totaling ~฿50.06 billion), with around ฿7.42 billion still outstanding. (For perspective, this volume reflects a large segment of Thailand’s small-loan market.) Non-performing loans remain high (about 23–24% of balances), underscoring the risk of this clientele.
 
Every year, more companies join the system than leave it. From 2017 through mid-2025, the government issued 1,414 new Pico licenses and only 106 were returned. For example, 2023 saw 47 new issuances versus 18 surrenders; 2024 saw 40 versus 22. The Finance Ministry notes that new applications “consistently outstrip returns, leading to continuous expansion” of formal micro-lending.
 
To better manage this growth, regulators are tweaking rules. One major change under review is allowing qualified Pico lenders (especially THB 10M “Plus” firms) to lend in adjacent provinces. This could broaden credit access but, as economists warn, also consolidate the industry. A Thai think-tank (TDRI) has cautioned that extending service areas “might also lead to the consolidation of the Pico Finance industry, with smaller businesses being forced out”. TDRI analysts even recommend technology solutions – such as big-data analytics and digital lending platforms – to strengthen credit assessments and monitoring in the sector.
 
In sum, the Pico-Finance license system has brought a large informal lending market into Thailand’s legal framework. By 2025 over 1,150 firms were licensed, giving borrowers formal contracts and legal protections (and giving regulators data on micro-loan performance). This shift has pros and cons: it provides safer, regulated credit channels for vulnerable borrowers, but also means small lenders must bear the costs of compliance. Ongoing vigilance and support (for example, facilitating digital tools as TDRI suggests) will help balance credit access with consumer protection in this growing niche.

 
Summary

A Pico-Finance license in Thailand permits a Thai-owned company to lend up to THB 50,000 (or 100,000 for “Pico Plus”) per borrower at an effective rate up to 36%. It requires a Thai-incorporated entity, majority Thai ownership, THB 5M (10M) paid-up capital, and fit-and-proper management. Applications are reviewed and inspected by the Ministry of Finance (FPO). Once licensed, the lender must adhere to full financial regulations (AML, consumer laws, auditing, etc.) and can only lend within its province. The license effectively legalizes higher-rate micro-lending under close oversight.
 
By mid-2025, over 1,150 firms held Pico licenses – evidence of how many small lenders have formally entered the system. In return for allowing rates above 15%, the state imposes stringent rules to protect borrowers and maintain market stability. For any small lender in Thailand, navigating Pico-Finance licensing means meeting all these requirements and operating as a regulated financial institution. This is the Pico Finance License for Thailand.
 
Sources: This summary is based on legal analyses and Thai regulatory sources. As we have noted that under the law, any province-level loan above 15% interest requires a Pico license. Thai legal advisories detail the company, capital and fit-and-proper requirements. Recent Thailand news reports give the current interest cap (36%) and sector figures. All data cited above come from these authoritative sources. This explains the  Pico Finance License for Thailand.