BoT offers reworking of retail loan repayment

BoT offers reworking of retail loan repayment

Bank unconcerned about bad loans

The Bank of Thailand has added measures on retail loan restructuring as part of its third phase of debt relief for individual borrowers, aiming to ease hardships caused by the pandemic.

The central bank started implementing new measures for debt relief on Friday, including restructuring consumer loans.

The rules allow auto hire-purchase loan and car title loan borrowers, including motorcycle owners, to return their vehicles to creditors if they cannot repay debt because of the outbreak.

If a vehicle is returned and borrowers have debt outstanding, the central bank asks financial institutions to help restructure the remaining debt on a case-by-case basis.

The financial institutions include commercial banks, specialised financial institutions and non-bank companies, said central bank deputy governor for financial institutions and stability Ronadol Numnonda.

The measures also offer additional options for longer loan period extensions and lower interest rates than the second phase.

"The third wave of the outbreak had a larger and wider impact on retail loan borrowers. The central bank is offering more instruments, options and relaxations for borrowers on a case-by-case basis," he said.

For mortgage borrowers, the central bank allows repayment on a step-up basis, which is a new measure in the third phase.

Retail debt relief measures under the second phase are still available for the third phase.

The central bank's third phase of debt relief measures cover four consumer loan products: unsecured credit card and personal loans, auto hire-purchase loans, car title loans and mortgages.

Mr Ronadol said individual borrowers who have the ability to repay debt should continue doing so to reduce their debt burden in the long term.

The massive economic impact of the third wave means retail non-performing loans in the banking sector are likely to increase, but should not reach a significant level, he said.

As a result, the central bank is not concerned about rising bad debt because it is expected to be controlled under the debt relief measures, said Mr Ronadol.

In addition, the central bank expects the government to manage the outbreak and vaccinate the population, which would encourage economic activities and support household income.

As of Dec 31 last year, both commercial and retail loan borrowers applying for debt relief measures from financial institutions since the first round in March 2020 accounted for a total of 3.7 trillion baht, of which 1.9 trillion or around 50% were retail loans, reported the central bank.

A total of 1.9 trillion baht worth of consumer loans applied for the debt restructuring programme -- 1.1 trillion baht was credit cards and personal loans, 600 billion housing loans, and 200 billion auto hire-purchase and car title loans, according to the central bank's data.

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