Two new emergency decrees -- one on the reduction of default interest rates and another to provide assistance worth 350 billion baht to business affected by Covid-19 -- came into effect on Monday.
Deputy government spokeswoman Rachada Dhnadirek said yesterday the decrees were aimed at relieving the debt burden of entrepreneurs and protecting them from unfair interest charges in light of the pandemic.
Published in the Royal Gazette on Saturday, the first emergency decree -- which amended the Civil and Commercial Code -- was designed to prevent creditors from charging unfair interest rates by abusing ambiguities in the old law.
Some creditors have forced debtors who missed a repayment to pay interest on top of the principal amount owed, as the old law did not set out the default rate.
Ms Rachada said the old law, which had been in use since 1925, no longer aligned with the economic situation.
The amended law sets the interest rate at 3% a year and decreases the default rate from 7.5% a year to 5% a year.
Debtors are now also allowed to calculate the default rate based on the amount of principal that remains unpaid, she said.
The interest rates for debtors will be revised every three years by the Finance Ministry, she said.
The second, called the emergency decree on the provision of financial assistance for entrepreneurs affected by the Covid-19 pandemic, provides business recovery loans totalling 250 billion baht for entrepreneurs.
The decree earmarks 100 billion baht to help debtors, particularly entrepreneurs severely affected by the pandemic, with asset warehousing and debt repurchasing schemes, she said.
It was necessary to urgently enforce the decrees to help businesses affected by the pandemic, she said.
Earlier in the year, the Finance Ministry and the Bank of Thailand had also discussed amending the law to provide greater financial relief for SMEs.