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Bank Of Thailand Introduce New Lending Guidelines Against Rising Household Debt

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Household Debt

Rising Household Debt- According to Assistant Governor Siritida Panomwon Na Ayudhya, the Bank of Thailand (BoT) is planning to implement new lending standards to address the growing family debt crisis, especially among Gen X and Gen Y age groups.

In order to address problems with informal debt, the central bank is also working on a draught royal decree that would regulate leasing and hire-purchase companies.

Household Debt Increased Between 2010 And 2021

Household debt in the nation increased from 60% to 90% between 2010 and 2021, partly as a result of the pandemic’s effects.

According to Siritida, this mounting debt could damage the banking and economic system, particularly for those with low incomes.

She continued by saying that the BoT would be watching the situation carefully and enforcing responsible lending standards to raise loan quality.

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Additionally, the Bank has charged Sukhumvit Asset Management Co (SAM) with growing the number of participants in its “Debt Clinic Project by SAM” by 50,000 by the year 2022.

Since 2017, 300,000 consumers have participated in the programme, and 40,000 of them have been eligible for debt restructuring.

According to Bangkok Post, SAM President Tharatporn Techakitkachorn observed that practically all debt clinic participants are from the Gen X and Gen Y age groups, with many finding it difficult to repay their debts as a result of the current economic crisis.

Household Debt At The End Of Fourth Quarter Of 2022

Household debt was 15.09 trillion baht ($452.53 billion) at the end of the fourth quarter of 2022, or 86.9% of GDP. SAM.

Which was founded in 2000 and is entirely owned by the Financial Institution Development Fund, was developed in response to the large amount of bad loans that followed the local financial crisis in the late 1990s.

Siritida admitted that the recent increases in the central bank’s interest rates will not have a substantial impact on borrowers’ repayment obligations.

She clarified that these hikes were gradual and that anyone enrolling in SAM’s debt relief programme would profit from the program’s liberal interest rates, which are intended to help debtors repay their obligations.

According to recent reports, Thailand’s household debt has increased significantly, reaching 86.9% of GDP.

This circumstance opens the door for conversations and activities relating to monetary stability, long-term economic growth, and encouraging consumer spending responsibility.

The BoT is committed to putting policies into place that will boost Thai households’ overall affordability of living expenditures, support prudent financial management, and strengthen their ability to repay debt as a result of these difficulties.

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