In a bid to rein in non-performing loans (NPLs), several commercial banks are offering a cut of 15-20% for payment of overdue loans to encourage customers to clear their credit card and personal debt, according to a debt collection firm.
Pracha Chaisuwan, managing director of Chet Collection Management, said some commercial banks were offering incentives for customers to pay-off credit card and personal loan accounts that are 90 days or more in arrears.
Mr Pracha, whose company is employed by several banks, said they hoped the promotions would to prevent further accumulation of NPLs.
The offers include a discount of 15-20%, to be negotiated cases-by-case, according to a report in Post Today.
“It is a golden time for clients to negotiate a loan cut. Financial institutions are worried about NPLs, so they instruct debt collectors to speed up the collection process, as it will only get more difficult further down the line,” said Mr Pracha, who is chairman of the Fair Debt Collectors Club.
On the other side of the coin, financial institutions will also speed up taking customers to court over uncollectable debts, he said.
Mr Pracha said some clients who had personal debts with financial institutions had negotiated to reduce the monthly instalments as they wanted to keep some cash in reserve in a time of uncertain economic outlook. Customers said they dared not to empty their purses to clear their debts.
Thakorn Piyaphan, managing director of Ayudhaya Capital Services, a loan unit of the Bank of Ayudhya, said personal loan payment negotiations start with extending the payment period and an interest reduction. If customers still cannot service their loans, the next step is to consider reducing the size of the loan.
He said average credit card and personal debt was about 80,000 baht, and 80-90% of customers earned a regular monthly income, so the situation was not at its worst as unemployment was still low.
According to the Bank of Thailand, outstanding personal debt at the end of May 2015 totalled 315 billion baht. NPLs three months or more overdue accounted for 14 billion baht, as of the end of December 2014, the latest figures available.