The Credit Information Protection Committee's decision to remove about 600,000 records of debtors with bad payment histories from the National Credit Bureau (NCB) database is expected to take effect in the next two weeks.
Ronadol Numnonda, the Bank of Thailand's assistant governor of the supervision group and secretary of the committee, said the committee's chairman has signed the approval document.
The NCB and financial institutions have already been informed of the move, he said.
The committee granted approval to the NCB to report the payment history of debtors with payments overdue by at least 90 days for five years. Such records will be held on the NCB's database for another three years before being erased. This means debtors' credit records will be kept for eight years.
Current regulations require the NCB to report the payment records of debtors who default until the overdue debt is paid off.
The move aims to give borrowers more access to financial sources so that they shun loan sharks.
Retail debtors would have improved records for obtaining bank loans after their debt records are deleted, but this would depend on the judgement of financial institutions, said Mr Ronadol.
A consumer's credit history is one factor that financial institutions take into account before providing loans. Debt-servicing ability and other financial standards are also considered.
Non-performing loans, defined as loans overdue by more than 90 days, stood at 2.3% at the end of June, unchanged from March.
NCB chief executive Surapol Opasatien said he was not concerned that the loosened regulations could lead to more bad loans, saying the committee had been studying this move for more than a year.