The Asian Development Bank ( ADB ) has extended a US$150 million loan ( in Thai baht equivalent ) to Ngern Tid Lor ( Tidlor ), one of the leading vehicle title finance lenders in Thailand, to support the development of women-owned micro, small and medium-sized enterprises ( MSMEs ), particularly those the agriculture value chain. 

The loan, announced on June 13, will be used to on-lend to underserved rural MSMEs, with 75% of financing dedicated to women-owned businesses and the rest, to agribusiness MSMEs. The project will focus on MSMEs in provinces outside Bangkok.

In signing the loan agreement, ADB director-general for private sector operations Suzanne Gaboury notes that MSMEs, especially in rural areas, struggle to access working capital and formal lending from banks.

“Many resort to informal channels that charge high interest rates and expose them to predatory practices,” Garboury adds. “The ADB’s support will provide reliable and affordable financing to help these businesses prosper. Women and the agriculture sector are key participants in the Thai economy, so it is essential to promote their access to financial services to foster inclusive and sustainable development.”

Thailand’s MSMEs are the backbone of the economy, the ADB emphasizes, as they provide the majority of employment and generate more than a third of gross domestic product. Women-owned or -led businesses comprise more than half of all MSMEs. But the sector faces an ever-widening financing gap estimated to have reached US$41 billion even before the Covid-19 pandemic hit.

The ADB, through the support of the PRC Poverty Reduction and Regional Cooperation Fund, will also provide technical assistance to Tidlor to develop a social finance framework ( SFF ), a first for a non-banking financial institution in Thailand. This is part of ADB’s overall effort to catalyze sustainable bond issuances across Southeast Asia.

The SFF will be aligned with the Asean Social Bond Principles and will enhance the transparency and uniformity of social bonds by clearly defining eligible social projects and establishing regular reporting requirements for lenders and investors. This will help Tidlor in securing future loans or bond issuance as well as help attract social impact-minded investors in the Thai market.

The project with ADB, says Piyasak Ukritnukun, Tidlor’s managing director, is fully aligned with the company’s strategy to promote financial inclusion with a digital- and data-driven approach.

Tidlor, which has 1,678 branches across Thailand, tailors its operations towards self-employed micro-entrepreneurs with thin or no credit history but who need to borrow to obtain working capital. It provides working capital financing to MSMEs by accepting movable assets, such as used motorcycles, cars, trucks and farm equipment, as security for loans.