Central bank sets floor for pandemic debt support
The Bank of Thailand has established guidelines for the minimum assistance financial institutions must offer debtors to ease their financial burden amid the pandemic, effective April 1.
Veerathai Santiprabhob, the governor of the central bank, said the coronavirus outbreak had hit individuals and large-scale small and medium-sized enterprises (SMEs), which required a directive.
“A cut in key rates is not enough to help borrowers,” he said.
All lenders, including commercial banks, specialized financial institutions (IFS), and non-banking and leasing companies, are required to adhere to guidelines covering six types of lending products: credit cards; loans of personal and automobile securities; automobile and motorcycle loans; rental of machines; mortgages; and loans to SMEs, nanofinance and microfinance.
The minimum amount owed on credit cards and revolving loans under the guideline will be reduced from 10% to 5% until 2021, rising to 8% in 2022. The rate returns to a minimum of 10% due in 2023.
Borrowers are also allowed to refinance their unsecured loans into longer term loans with lower interest rates.
Credit card rates are capped at 20% annual interest.
Mr Veerathai said the minimum debt restructuring measures would help creditors control bad debts from customers affected by the epidemic and unable to repay their debts.
“Borrowers who still have jobs and can make their repayments should continue to service the debt as usual, while financial institutions should offer them attractive measures to maintain loan quality,” he said. -he declares.
Individual financial institutions offer their own debt restructuring plans to help customers in difficulty.
The Bank of Thailand took debt restructuring measures in late February.
Within two weeks of implementing the measure, 30,000 borrowers with combined loans of 234 billion baht applied for the program.
The candidates rose to 156,000 with a total debt of 310 billion baht, Mr. Veerathai said.