Introduction
Finance leases offer a range of strategic advantages, including lower upfront capital requirements, potential tax deductibility of lease payments, enhanced flexibility in accessing and upgrading assets, and improved cash flow management through fixed payment structures. Importantly, they enable business operators to utilize essential assets without committing substantial capital resources.
This article aims to provide an overview of the regulatory framework governing the operation of finance lease businesses in Thailand.
01
Legal Framework of Finance Lease
- Principal Authorities
In general, any entity which intends to engage in finance lease businesses shall be mainly supervised by the following authorities of Thailand:
- Department of Business Development of the Ministry of Commerce (“DBD”)
- The Bank of Thailand (“BOT”)
- Applicable Laws, regulations & rules
The primary laws and regulations apply to juristic person that undertake financial institutions businesses as follows:
- Financial Institutions Businesses Act B.E. 2551 (“FIBA”)
- The Civil and Commercial Code B.E. 2535 (“CCC”)
- Foreign Business Act B.E. 2542(“FBA”)
- Notifications of the BOT
- Notifications of the Ministry of Finance
02
Overview of Finance Lease
As of the date hereof, there is no specific definition of “Finance Lease” indicated in any law.
However, Finance lease (also referred to as leasing business) falls within the scope of credit-like transaction under Section 4 of FIBA, which includes factoring business, hire purchase business, leasing and other transaction possessing characteristics similar to granting of credits prescribed in the notification of the BOT.
Moreover, it was defined in Notification of the BOT No. FPG. 1/2551 Re: Permission for Commercial Banks to Conduct Hire Purchase and Leasing Businesses(“Notification”).
In practice, finance lease can be summarized as follows:
| NO. | Items | Descriptions |
| 1. | Definition | Classified as credit-like transaction under FIBA; |
| As per Section 5.1of the Notification, leasing means renting an asset under a financial lease contract whereby the provider of financial leasing (“the lessor”) procures an asset according to the lessee’s bidding from a producer, distributor, or other party or an asset repossessed from another lessee, in order to allow the lessee to utilize such asset. | ||
| 2. | Nature of Lessor | Non-banks.
Including but not limited to providers of 1) credit cards, 2) personal loans (P-Loan) and/or Nano Finance Business under supervision; 3) asset management; 4) peer to peer lending platforms; and 5) other business under BOT supervision. |
| Note:
No specific meaning of “Non-Banks” indicated in any BOT notification or any other law, but usually means an entity under BOT supervision apart from those involved in the provision of “Financial Institution Business”. |
||
| 3. | Characteristics | Generally:
· The lessee is obligated to maintain and repair the leased asset. · The lessee cannot terminate the contract unilaterally before maturity. · The lessee possesses the leased property and pays the fee throughout the agreed term. · At the end of the term, the lessee may opt to renew the financial lease, or purchase or return the leased property back to the lessor. |
03
Legal Requirements for Finance Lease
As per Section 9 of FIBA, undertaking of a commercial banking business, finance business or credit foncier business (collectively, “financial institutions businesses”) shall be established in the form of a limited public company with a license granted by the Minister of Finance at the advice of the BOT. The details are as follows:
| No. | Types of Business | Definitions | Major Requirements |
| 1. | commercial banking business | business of accepting deposits of money or accepting money from the public subject to repayment on demand or at the end of a specified period and of employing such money in one or several ways such as granting of credits, buying and selling of bills of exchange or other negotiable instrument, buying and selling of foreign exchange. | · Formation as a public limited company registered under Thai law;
· Obtain a license from the Minister of Finance at the advice of the BOT; and · Financial institutions’ shares shall be held by persons of Thai nationality of no less than 75% of distributed shares with voting rights and no less than 3/4 of all directors must be of Thai nationality. Note: Where it is deemed appropriate, the BOT may permit foreigners to hold shares up to 49% of the distributed shares with voting rights and may permit over 1/4 of the directors to be of non-Thai nationality but the proportion shall not be more than 50% of the total number of directors. |
| 2. | finance business | business of accepting deposits of money or accepting money from the public subject to repayment on demand or at the end of a specified period, which is not accepting deposits or money in such account that may be withdrawn by cheque, and of employing such money in one or several ways such as granting of
credits, buying and selling of bills of exchange or other negotiable instrument. |
|
| 3. | credit foncier business | business of accepting deposits of money or accepting money from the public subject to repayment at the end of a specified period and of employing such accepted money in one or several ways as follows:
(1) granting credits by mortgaging immovable property; (2) accepting immovable property on consignment. |
Requirements for Finance Lease
- No Financial License Required
Notwithstanding the above, since finance lease only falls within the scope of credit-like transaction under Section 4 of FIBA rather than financial institutions businesses, it is therefore not required to register as a public limited company or apply for any license from the authorities in terms of conducting finance lease business.
- Registration with the BOT Advised
On June 5, 2025, the Royal Decree determining that Hire Purchase and Financial Leasing Businesses for Cars and Motorcycles Shall Be Subject to the Financial Institution Business Act B.E. 2551 (2008), (“Royal Decree on Hire Purchase and Leasing”) was published in the Royal Gazette. The decree will take effect 180 days from the date of publication, i.e., on December 2, 2025.
In anticipation of this, operators of hire purchase and leasing business for cars and motorcycles are advised to begin preparations for registration with the BOT to ensure compliance with upcoming regulatory requirements and future supervisory oversight.
Exceptions
Business operators shall obtain permission from the relevant authorities for finance lease business and comply with the specific requirements under the circumstances as below:
- Foreign Business License(“FBL”)
A foreigner, including natural and justice persons, must apply for and obtain an FBL since providing financial leasing shall be regarded as business in List Three (21) “other services” under the FBA.
- Personal Loan License
A P-Loan License is required if the business of the finance lease falls within the scope of personal loan Business.
As per Clause 2 of the Ministry of Finance Notification Re: Business Subject to Approval to Clause 5 of the Revolutionary Council Decree 58 (Personal Loan Under Supervision) dated 30 July B.E. 2563 (2020), “Personal Loan under Supervision” means the loans (1) originated from hire purchase and leasing of goods that the operators do not sell as usual, except automobiles, machines, and any other assets as prescribed additionally by the BOT, (2) provided to natural persons, and (3) charging total maximum of interests, fines, service charges, and any fees more than the allowed interest rate according to the CCC.
- Permission from BOT
In cases where a business operator of finance lease also engages in business by way of taking deposits or lending, it will be possibly classified as a financial institution under FIBA and must be licensed under FIBA, subject to the terms and conditions thereof.
04
Key Takeaways
- No Financial License Required
In general, non-bank entities engaging solely in finance lease activities, without engaging in lending or accepting deposits from the public, are not required to obtain a license or approval from the competent authority.
However, if the nature of their business falls within the scope of personal loan business or financial institution business as defined by applicable regulations, they must apply for the relevant license or approval in accordance with regulatory requirements.
- Foreign Business License still required for Foreigners
A foreign company must apply for and obtain an FBL since providing financial leasing shall be regarded as business in List Three (21) “other services” according to the FBA, and does not fall under any exempted activity.
- Supervision by BOT
- Registration with BOT
Operators of hire purchase and leasing business for cars and motorcycles are advised to register with the BOT to ensure compliance with the forthcoming regulatory requirements and supervisory framework under the Royal Decree scheduled to take effect later this year.
- BOT’s Authority to Initiate Legislation
As per section 5 under FIBA, any business undertaking in the manners of deposit taking, accepting deposits from the public, granting of credits or engaging in financial business, if it affects the overall economy of the country and there is no specific law supervising of such business, the BOT may propose an enactment of a Royal Decree prescribing such business to be subject to the provisions of FIBA, either fully or partially included related penalty clauses. In addition, supervisory regulation for such business may also be prescribed.
As a result, the operation of a financial leasing business shall be subject to licensing or approval by the relevant authority, where otherwise required by specific laws.
