Thailand’s household debt has soared to 16.37 trillion baht (US$463 billion), or 90.8 per cent of the nation’s gross domestic product, from less than 14 trillion baht in 2019, as South-East Asia’s second-largest economy struggled to shake off the impact of the Covid pandemic. – Reuters
BANGKOK: Thailand’s central bank announced a slew of relief measures for borrowers struggling to repay home loans and credit card dues, stepping up efforts to tackle the highest household indebtedness in South-East Asia.
The minimum repayment rate of 8 per cent for credit-card users, which the central bank earlier proposed should be increased to 10 per cent from Jan 1, 2025 will be extended until the end of next year. Debtors unable to meet the minimum repayment obligation can seek to restructure their obligations to term loans to be paid back in instalments, Bank of Thailand said in a statement late Friday (Aug 2).
The central bank will continue to promote consolidation of lenders’ home and retail debt by relaxing the loan-to-value ratio norms to reduce the overall burden and bring down the interest rate. For borrowers with the so-called persistent debt, BOT has extended the settlement period to seven years from five under its responsible and fair lending practices.
The debt-relief measures were approved by BOT’s Financial Institutions Policy Committee, which "saw that there are still vulnerable debtors who need additional assistance because their income has not fully recovered,” Deputy Governor Ronadol Numnonda said in a statement.
Thailand’s household debt has soared to 16.37 trillion baht (US$463 billion), or 90.8 per cent of the nation’s gross domestic product, from less than 14 trillion baht in 2019, as South-East Asia’s second-largest economy struggled to shake off the impact of the Covid pandemic.
Prime Minister Srettha Thavisin’s government is giving out 10,000 baht each to about 50 million adult citizens in a bid to jumpstart the nation’s economy.
The latest central bank relief measures fall short of Finance Minister Pichai Chunhavajira’s demand to cut the minimum credit card repayment to 5 per cent – a rate that was in force during the pandemic years. BOT Governor Sethaput Suthiwartnarueput has previously described the high household debt as "a chronic disease” that won’t go away anytime soon.
The country’s high level of household debt has been seen as one reason behind the central bank’s reluctance to reduce rates from a decade high 2.5 per cent. BOT’s rate panel has repeatedly ignored Srettha’s calls to lower the borrowing cost and instead called for continued deleveraging and more targeted measures to ease the household debt levels.
The central bank said it will closely monitor the effectiveness of the new measures and is ready to adjust them according to the situation, if needed. – Bloomberg
