The Bank of Thailand has told commercial banks to focus on capital management at a time when millions are feeling the pain of the Covid-19 economic shock. The Bank of Thailand has ordered Thailand’s commercial banks to freeze interim dividend payments to shareholders. And also suspend stock buybacks to preserve capital in an economy devastated by the Covid-19 pandemic.
Bank of Thailand Governor Veerathai Santiprabhob said that Covid-19 had caused widespread impacts on businesses and the general public. The Bank of Thailand has ordered commercial banks to draw up management plans for the next three years.
While those plans are being worked out, he said, payouts due in the middle of this year and share buybacks will be put on hold.
“Phase 2” of Covid-19 relief measures
Meanwhile, the Bank of Thailand and nine financial institutions have agreed on “phase 2” of Covid-19 relief measures. Including interest-rate reductions, said Ronadol Numnonda, deputy governor in charge of Financial Institutions Stability.
Repayment deadlines and minimum amounts would also be considered, he added.
Debt relief measures announced on Friday include interest rate cuts of 2-4 percentage points for credit cards and personal loans.
The maximum interest rate for credit cards will fall to 16% per year from 18%, while the rates for personal loans will be reduced to 24-25% from 28%, effective from Aug 1, the BoT said.
The new rates for revolving loans and installment loans will be 25%. Auto title loans will carry a maximum rate of 24%. The central bank also said credit lines could be raised for credit cards and personal loans for some good debtors from August to December.
Relief package to sustain debtors
The Bank of Thailand is also unveiling a relief package to help debtors ravaged by the Covid-19 pandemic. Days before the three-month blanket debt holiday is expires. The package include cutting interest rates for credit cards, personal loans and auto title and hire purchase loans.
Under the new scheme, the Bank of Thailand requires credit card operators to trim rates by two percentage points to 16% from 18%. Credit card debtors will be subjected to a mere 12% rate if they convert their debt into a term loan.
The cash card rate will be lowered to 26% from 28%, while the interest rate for personal loans will be slashed to 25% at commercial banks and 22% at specialised financial institutions and non-bank companies.
The central bank caps the personal loan rate at 28%.
The interest rate for auto title loans will be cut to 24% from 28%, and the rate for hire purchase loans will be trimmed by one percentage point.
For mortgages, the central bank will require lenders to provide a three-month debt holiday. Also debt restructuring to reduce monthly installment payments and reschedule payment plans.
Source: Bangkok Post, Bloomberg