The Bank of Thailand (BOT) announced on Wednesday its “Credit Assistance Measures” for non-performing loan (NPL) debtors, which will come into effect on April 1. The measures are meant to help debtors that have been affected by the outbreak of coronavirus and prevent more NPLs within the system.
The number of NPLs in commercial banking in the fourth quarter of 2019 increased by 16.7 per cent from the same period in 2018, up 2.81 per cent quarter-to-quarter and accounting for 2.9 per cent of total loans from commercial banks.
The BOT’s first measure involves credit cards and cash flow loans. Service providers will reduce the minimum payment rate from 10 per cent down to 5 per cent for the rest of 2020 and the whole of 2021, 8 per cent in 2022, and back to 10 per cent in 2023. In addition, the debtor can convert the debt into long-term loans with lower interest.
The second measure involves personal loans that are paid in instalments and vehicle registration loans. Commercial banks and specialized financial institutions (SFI) will postpone the payment of principal and interest for three months. Other service providers can choose to proceed with the postponement of principal and interest payments for three months or reduce the instalments by at least 30 per cent of the original instalment for six months.
The third measure involves the providing of hire purchase loans, where loans for motorbikes will be limited at 35,000 baht, and loans for all types of cars will be limited at 250,000 baht.
The fourth measure involves the providing of leasing with a debt balance that is not exceeding 3 million baht. Service providers can choose to proceed between deferring the payment of principal and interest for three months, or the suspension of principal repayment for six months.
The fifth and sixth measures involve home loans that are not over 3 million baht, and business loans for small and medium-sized enterprises (SMEs), microfinance, and nano-finance that do not exceed 20 million baht. For these measures, institutions will suspend the payment of principal for three months and consider reducing interest according to individual circumstances. The minimum instalment rate will also be dropped from 10 per cent to 5 per cent in 2020 and 2021, 8 per cent in 2022, and back to 10 per cent in 2023. In addition, debtors can also convert the debt into long-term loans with lower interest.
According to the BOT’s guidelines for the measures, debtors with various types of loans will be able to receive all types of assistance according to conditions. On top of these measures, each financial institution also has a project to assist debtors in specific groups that are more affected as well. The central bank urged debtors to contact their bank for more information on what they can do to help.