Section 654 — Interest cap — 15% per annum
Statutory text (Thai original)
ท่านห้ามมิให้คิดดอกเบี้ยเกินร้อยละสิบห้าต่อปี ถ้าในสัญญากำหนดดอกเบี้ยเกินกว่านั้น ก็ให้ลดลงมาเป็นร้อยละสิบห้าต่อปี
Verbatim from the Royal Gazette / Office of the Council of State
English translation
Interest shall not exceed 15% per year; when a higher rate of interest is fixed by the contract, it shall be reduced to 15% per year.
This English translation is provided for reference only and has not yet been firm-verified — always rely on the Thai original.
Firm annotation
Section 654 caps private-party interest at 15% per annum. The cap is mandatory — parties cannot contract around it. Two important exceptions: (1) licensed financial institutions (banks, regulated NBFIs) operate under the Bank of Thailand's separate interest framework, often higher; (2) commercial loans between business entities have the same 15% cap unless one party is a licensed financial institution. The Act on Loans of Money Carrying Interest Beyond the Permitted Rate (B.E. 2475) makes charging interest above 15% a criminal offence punishable by up to 2 years imprisonment.
Why this matters in practice
Lawyers: The 15% cap applies to private loans between individuals. Licensed banks and financial institutions are not subject to Section 654 — their rates are regulated by the Bank of Thailand under the Commercial Banking Act. Charging interest above 15% between private parties may also constitute a criminal offence under the Act on Usurious Interest Rates. Laypeople: If you sign a loan agreement with more than 15% annual interest between private individuals, the excess is void by law and only 15% can be demanded.
Legislative history
Part of the original Civil and Commercial Code codification; no major subsequent amendment to the 15% ceiling itself, though financial institutions are separately governed by the Commercial Banking Act and Bank of Thailand regulations permitting different rates.
Supreme Court decisions interpreting this section
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Supreme Court Judgment No. 570/2549 (2006) ★ Landmark
Licensed financial institutions are exempt from the Section 654 interest cap and are instead regulated by the Bank of Thailand under the Commercial Banking Act.
A licensed financial institution is not subject to the interest cap in Section 654 but is instead governed by the Commercial Banking Act, under which the Bank of Thailand has authority to set permissible interest rates for commercial banks.
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Supreme Court Judgment No. 3375/2549 (2006)
Where a loan agreement contains contradictory interest rate terms and the lender cannot prove the intended rate, the court applies the statutory maximum of 15% per annum.
Where a loan agreement contained contradictory interest rate clauses (one printed figure and one handwritten figure), and the lender failed to adduce evidence of the intended rate, the court applied the legal maximum of 15% per annum under Section 654.
Curated decisions with case numbers verified against the Supreme Court database. English renderings are the firm's editorial translation for study.
Frequently asked questions
A moneylender is charging me 5% per month. Is this legal?
No. Five percent per month equals 60% per year, far above the 15% annual cap in Section 654. Between private individuals, any interest above 15% per year is automatically reduced to 15% by law. Charging more may also be a criminal offence under the Act Prohibiting the Charging of Usurious Interest Rates.