An amended law governing asset management companies will allow these firms to acquire bad assets for credit cards and personal loans from non-bank financial institutions, says a source at the Finance Ministry who requested anonymity.

The amended legislation will widen the business scope of asset management companies to purchase and transfer bad credit cards and personal loans, and provide bad asset management service to non-bank financial institutions including picofinance and nanofinance firms, the source said.

Asset management companies will also be able to provide advisory services regarding debt restructuring to either financial institutions or their borrowers.

The amended law has already been vetted by the Council of State.

A 1998 emergency decree on asset management firms was passed after Thailand faced a mountain of soured loans, which undermined banks' ability to mobilise fresh funds and extend loans during the financial malaise that erupted in 1997.

At the peak of that crisis, Thailand's non-performing loans reached nearly 50% of the banking system's loans outstanding. The decree allowed banks to sort out bad assets and sell them to asset management companies, offering tax incentives and other perks to facilitate the bad asset disposal.

The decree allowed asset management companies to purchase or be recipients of delinquent assets transferred from financial institutions or defunct banks, finance companies and credit firms to manage or resell.