New Royal Decree Places Hire-Purchase and Leasing of Cars and Motorcycles under Financial Institutions Business Act

On 5 June 2025, the Royal Decree Designating Hire-Purchase and Leasing of Cars and Motorcycles as Businesses Governed Under the Financial Institutions Business Act, B.E. 2551 (2008) B.E. 2568 (2025) (“Royal Decree”) was published in the Royal Gazette. The Royal Decree was enacted by virtue of Section 5 of the Financial Institution Business Act B.E. 2551 (“FIBA”), which allows the Bank of Thailand (“BOT”) to propose the issuance of a royal decree to designate any financial business that currently is not governed under existing laws, but may have a significant impact on the Thai economy, to be governed, in whole or in part, under FIBA and the related penalty provisions. It also allows for the issuance of supervisory criteria.

The Royal Decree establishes the following regulatory framework:

1. Businesses Subject to Regulation 

1.1 Hire-Purchase Business

This refers to a business that engages in the hire-purchase of cars or motorcycles, as defined in Section 572 of the Thai Civil and Commercial Code. The term “hire-purchase” refers to a contract in which the owner leases an asset to a lessee and undertakes to transfer ownership of the asset after the lessee has made a certain number of installment payments, and the Royal Decree applies to businesses that engage in hire-purchase as a commercial activity.

1.2 Leasing Business

This refers to a business that engages in car or motorcycle leases that transfer substantially all of the risks and rewards of ownership to the lessee, wherein the lessor procures the vehicle at the lessee’s request, early termination by the lessee is not allowed, any purchase option at the end of the lease depends on the parties’ agreement, and the contract must comply with finance lease accounting standards applicable to businesses that engage in leasing as a regular commercial activity.

* Exemptions: The Royal Decree does not apply to:

• Financial institutions and specialized financial institutions, as defined in the FIBA;
• Cooperatives under the Cooperative laws;
• Non-juristic persons (i.e. individual operators).

2. Regulatory Requirements for Controlled Businesses

2.1 Disclosure Obligations

• Disclosure of interest rates and service fees at business premises and via other media, to ensure transparency for the public and customers, with obligations to report to the BOT.
• Explanations of how annual service rates are calculated must be made available to the public and customers.

2.2 Compliance with BOT Criteria

The BOT will establish further requirements, including:

• Rules on contracts with a customer involving assets or value specified by the BOT, whether in terms of the contract’s substance, method of calculation of benefits, or contract form.
• Rules for contracts that allow unilateral amendments by the business operator.
• Requirements for disclosing the business operator’s information.
• Rules regarding interest rates, fees, deposits, securities, collectible benefits, and penalties.
• Criteria for using third-party service providers in the operation of the business.
• Submission of financial statements, reports, and relevant data, in any form, and clarifications or further explanations upon request.
• Recordkeeping obligations related to accounts, seals, documents, assets, and liabilities.

2.3 Accounting Standards

Business operators must prepare accounts that reflect their actual operating results and financial positions, in compliance with accounting standards established by professional institutions approved by the relevant government authorities.

2.4 Supervision and Enforcement

The BOT is authorized to appoint its own personnel or outside individuals to act as inspectors, to examine the business, assets, and liabilities of the business operators, including those associated with such business operators, either generally or on a case-by-case basis.
If the business operator violates or fails to comply with the Royal Decree or related notifications issued in accordance therewith, the BOT may issue a warning letter to the business operator or related persons ordering them to cease the offending conduct, and may issue an order prohibiting the relevant act(s). In serious cases of non-compliance or unfair/exploitative behavior toward customers that may cause significant damage, the BOT has the authority to order operational corrections or temporarily suspend part or all of the business operations during a specified period.

2.5 Penalties

Violations of this Royal Decree will be subject to the penalties established under the FIBA on a case-by-case basis, with the relevant provisions of the FIBA being enforced accordingly.

3. Timeline for Implementation

Currently, the Royal Decree does not provide detailed regulatory criteria for supervision of the controlled businesses. The relevant details will be set forth in subordinate regulations to be issued subsequently. According to the tentative plan announced by the BOT, the implementation schedule is as follows:

Since the Royal Decree will become effective 180 days from its publication in the Royal Gazette—i.e., 2 December 2025—and the BOT notifications also will take effect in December 2025, affected businesses should monitor legal developments closely, and prepare for compliance with the upcoming regulatory framework.

This article is intended merely to provide a regulatory overview and not to be comprehensive, nor to provide legal advice. Should you have any questions on this or on other areas of law, please do not hesitate to contact:

Nuttaros Tangprasitti
Partner

Krid Pongprapaphan
Associate

Authors