The Bank of Thailand is planning four measures to lower Thailand’s household debt, currently at 90.7% of GDP. This includes responsible lending, addressing chronic indebtedness, and risk-based pricing.
Bank of Thailand’s Measures to Reduce Household Debt
The Bank of Thailand (BoT) is considering four measures to reduce Thailand’s household debt to 80% of GDP, down from the current 90.7%. According to Ronadol Numnonda, deputy governor for financial institution stability at the BoT, the increase in public debt is attributed to recent crises, including the COVID-19 pandemic, which has deepened indebtedness for individuals and businesses.
Measures to Address Chronic Indebtedness
The first measure, set to be introduced in January, focuses on responsible lending. Financial institutions will need to exercise caution and responsibility when extending loans, taking into account the borrower’s existing household debt. Additionally, efforts will be made to address chronic indebtedness. Individuals who can only repay the interest and not the principal will have access to financial institutions for refinancing their personal loans within a five-year period, with a maximum interest rate of 15%. This measure is expected to be implemented in April. Another measure being considered is risk-based pricing (RBP), which aims to provide debtors with access to new funding at lower interest rates, allowing them to settle their old debts.
