Debt Clinic sees overwhelming demand
Debt Clinic, a centre to pool unsecured soured loans of 16 local and foreign commercial banks with the aim of turning them into performing assets, has received a stronger than expected response from borrowers.
Some 3,000 applications were submitted on the Debt Clinic's website on its first day of operation yesterday and there were another 100 walk-in applicants, said Niyot Masavisut, Sukhumvit Asset Management's (SAM) senior executive vice-president and acting president.
SAM is responsible for managing the clinic.
He said 10,000 applications are expected by the end of the year, but the number of applicants yesterday exceeded his expectations.
The clinic targets regular income earners who failed to repay credit, cash card, or personal loans with at least two banks for more than three months before May 1. The participants' principal plus unpaid interest must not exceed 2 million baht per borrower.
After entering the programme, participants will repay the debt only through SAM and their restructured debt will carry interest rates in a range of 4-7% for up to 10 years, depending on the monthly income of debtors. The rate, far below the central bank's ceiling of 20% for credit card loans and 28% for personal loan, will ease participants' financial burden.
The scheme is part of the Bank of Thailand's effort to reduce the country's household debt, which clocks in at 80% of GDP. Pooling non-performing loans will allow commercial lenders to better address them by collecting comprehensive information on troubled debtors.
SAM, the country's second-largest asset management company, has around 20 personnel working at the Debt Clinic, but would consider doubling the number of assigned staff if demand increases.
"Borrowers who want to join the loan restructuring programme should first provide their personal information on the website, which shortens the process," said Mr Niyot.
Surapol Opastien, chief executive of the National Credit Bureau, said it is offering free credit checks for Debt Clinic participants, waiving the 100 baht transaction fee through Aug 30.
"It's good news the scheme was well received and many people contacted SAM even before the clinic opened for registration today," said the Bank of Thailand governor Veerathai Santiprabhob.
"However, some people might not be qualified to join the programme as their creditors are non-banks that haven't been able to participate in the debt clinic."
Mr Veerathai said the Bank of Thailand is in the process of amending the Asset Management Corporation Act to allow the debts of non-banks to also be managed by SAM.
He said the central bank could consider revising the requirements to allow more people to join the clinic.