Bank of Thailand allows cross-bank debt consolidation to help debtors

The Bank of Thailand (BoT) has allowed debt consolidation across financial institutions to help retail debtors pay lower interest rates, an official said on Monday, as policymakers try to ease the impact of coronavirus outbreaks. Debtors can combine their unsecured debt with home loans at different banks, rather than at the same lenders as previously, Suwannee Jatsadasak, a senior director at...

Bank of Thailand allows cross-bank debt consolidation to help debtors
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Bank of Thailand allows cross-bank debt consolidation to help debtors

published : 22 Nov 2021 at 16:01

writer: Reuters

FILE PHOTO: The Bank of Thailand logo is pictured in Bangkok, Thailand, Aug 5, 2016. (Reuters)

The Bank of Thailand (BoT) has allowed debt consolidation across financial institutions to help retail debtors pay lower interest rates, an official said on Monday, as policymakers try to ease the impact of coronavirus outbreaks. Debtors can combine their unsecured debt with home loans at different banks, rather than at the same lenders as previously, Suwannee Jatsadasak, a senior director at the BoT, told a news conference.

Banks are allowed to charge interest rates on such consolidated unsecured loans, such as credit card and personal loans, not exceeding mortgage rates plus 2% per year, or totalling about 8% currently, she said.

That compared with interest rates on credit card and personal loans of 16% and 25% per year, respectively.

Banks are not allowed to collect prepayment fees until the end of 2023, Ms Suwannee said.

The central bank has relaxed rules on banks' debt classification, reserve requirements and capital levels to reduce costs for lenders that help with the debt consolidation scheme by the end of 2023, she added.

The debt consolidation is among a series of financial measures to help debtors and businesses.

"The measures that the BoT has implemented will enable financial institutions to continue functioning and banks to lend," Ms Suwannee said.

In the third quarter, banks' overall loans grew 5.6% year-on-year, up from a 3.7% rise in the previous quarter, as demand from businesses rose along with economic recovery.

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