BoT signs pact on mediating legal financial disputes
The Bank of Thailand and the Office of the Court of Justice have signed a memorandum of understanding (MoU) on mediating legal financial disputes for financially-distressed borrowers and small and medium-sized enterprises (SMEs).
The MoU provides a standard of practice for settling disputes such as defaulting on interest payment, stipulating a suitable loan repayment period to align with debtors' financial status and establishing a clear dispute settlement framework, said the Bank of Thailand statement.
The MoU will also aim to enhance financial expertise for mediators of the court in order for borrowers and creditors to put the agreed framework of legal disputes into practice, the statement said.
Besides reducing losses and the number of cases incurred from litigation, the move will help curb the severity of the impact of elevated household debt and the Covid-19 crisis, the statement said.
The central bank expects retail borrowers to benefit from this MoU as borrowers will have a greater role in the negotiation process.
Once an agreement is finalised between borrower and creditor, the borrower will not be legally prosecuted, while the creditor will benefit from debt repayment.
The mediation process of legal disputes in courts will not be complicated as a mediator will help with the negotiation process to finalise a mutual agreement, said the statement.
The mediation process can also be conducted through various online platforms.
The central bank and its allies in various sectors have a target to mediate at least 300,000 civil disputes related to the financial system in 2021 or nearly a quarter of 830,000 consumer cases registered in 2019.