Financial Institutions Ready to Comply with Debt Reduction Measures

Financial Institutions Ready to Comply with Debt Reduction Measures

Financial Institutions expressed readiness to comply with measures to reduce household debt that is set to begin next year.

Financial Institutions Ready to Comply with Debt Reduction Measures

The Bank of Thailand will commence with persistent debt (PD) for revolving personal loans as part of the household debt settlement plan and will encourage performing loan debtors to take part in the scheme. Participants would be able to receive an annual interest rate of no more than 15%, compared to the current 25% ceiling rate for personal loan products.

PD clients will be categorized into general and severe groups. Individuals considered to be in General PD are those who have been in debt consecutively for three years, while severe PD borrowers are those who are in debt consecutively for five years, with a minimum monthly income of 20,000 baht if using a bank or 10,000 baht for non-bank users. The measures are set to go into effect on April 1, 2024.

Following the announcement from the central bank, Bank for Agriculture and Agricultural Cooperatives (BAAC) managing director Chatchai Sirilai stated that BAAC is ready to help its clients relieve their financial burden in accordance with the central bank’s regulations. He emphasized that the bank’s 4.3 million customers are mostly PD borrowers who are in elderly and vulnerable groups, stressing that the banks want to get them out of debt as soon as possible.

Meanwhile, Personal Loan Club Vice-President Athip Sinpagekan stated that its non-bank members are ready to comply with the measures and will encourage their clients to participate in the PD plan. Payong Srivanich, Chairman of the Thai Bankers’ Association, affirmed that commercial banks will comply with PD measures as well.

BOT Deputy Governor Ronadol Numnonda added that the central bank would approach loan operators and the rest of the co-operatives to join the household debt resolution program as well. Currently, the central bank is in charge of approximately 70% of total household debt.