Krungsri Consumer, an unsecured loan unit under Bank of Ayudhya (BAY), has prepared cash flow worth 50 billion baht for the debt relief scheme's implementation over the course of two months, its chief says.
The company is offering additional debt relief measures from the minimum guidelines set by the Bank of Thailand for credit cards and personal loan borrowers, said Thakorn Piyapan, head of Krungsri Consumer.
"The liquidity is expected to be sufficient for the grace period on both principal and interest for two months," he said. "If the coronavirus lasts longer, we would consider it again. The cash flow mainly comes from bond issuance and banks' borrowing."
Krungsri Consumer normally receives loan payment from customers worth 30-40 billion baht a month. It has 14 million customers, of which 6 million are credit card holders and the remaining 8 million are personal loan borrowers.
Some 800,000 to 1.2 million customers will join the debt restructuring scheme, covering a grace period on both principal and interest, and interest rate cuts.
The debt moratorium, running until June 14, automatically applies to all customers, while interest rate reduction is available for credit cards and personal loans.
For credit cards, the company converts the lending to term loans with the instalment repayment period of up to 48 months and lowers annual interest to 12% from 18%. The debt relief scheme is available to credit card holders with a minimum debt balance of 100,000 baht.
Krungsri Consumer also cut the interest rate for personal loans from 28% to 22% until Dec 31, 2021. Customers who want to join the lower-rate scheme need to apply via mobile banking app U Choose from today.
Mr Thakorn said the company spent two weeks to adjust internal systems and processes in preparation for the debt restructuring measures after the central bank launched the guidelines on minimum assistance to debtors.
The company is prioritising financial assistance to ease customers' burden rather than business growth.
The pandemic has also taken a toll on the company, Mr Thakorn said, adding that credit card spending and personal loan extension were halved for the first 10 days of this months from the same period last year.
He said the company will see a business contraction for three straight periods at 20% in the first quarter, 50% in the second and 30% in the third before picking up in the final quarter.
Krungsri Consumer's business is expected to contract 35-40% for the full year.
With debt restructuring measures, the company saw its non-performing loans (NPLs) for credit cards and personal loans rise by 0.70 percentage points each from the end of last year to 1.6-17% and 3.4%, respectively.
Without the scheme, credit card NPLs could be expected to surge above 3% while the bad debt of personal loans would be higher than 6%.
Meanwhile, the Bank of Thailand has urged financial institutions to make their best effort to help virus-hit businesses and individuals, said deputy governor Ronadol Numnonda.
Assistance from financial institutions are the minimum measures that they can offer to affected customers, so debtors can ask for additional aid such as interest rate cuts in the event that they are still unable to service debt.