BoT suggests long-term debt rejig

BoT suggests long-term debt rejig

Pandemic to have lasting effects

The atmosphere at Siam Paragon mall in Bangkok during the lockdown in the capital. Arnun Chonmhatrakool
The atmosphere at Siam Paragon mall in Bangkok during the lockdown in the capital. Arnun Chonmhatrakool

The prolonged nature and long-lasting effects of the Covid-19 pandemic mean commercial banks and clients should focus on long-term debt restructuring, says the Bank of Thailand.

Ronadol Numnonda, the central bank's deputy governor for financial institutions stability, said short-term debt suspensions or restructurings are not proportionate to the suffering of bank clients as a result of the pandemic and lockdown restrictions.

He said the pandemic is expected to be a factor in the country's economy for a long time and it will take time for bank clients' businesses to fully recover.

This means both banks and their clients should focus on long-term debt solutions, said Mr Ronadol.

The central bank is in talks to provide incentives to banks to encourage them to offer long-term debt restructuring packages to their clients.

He said banks can offer long-term debt restructuring without waiting for the Bank of Thailand to amend any related rules.

Mr Ronadol said the central bank is not going to determine the minimum length of long-term debt restructuring as this depends on clients' particular circumstances.

He stressed there is no "one size fits all" solution.

Suwannee Jatsadasak, senior director of regulatory policy for the Bank of Thailand, said the institution is pushing for long-term debt restructuring for retailers and small and medium-sized enterprises affected by the pandemic.

She said banks have enough ammunition to offer long-term relief packages to their clients.

The central bank's Monetary Policy Committee (MPC) recently slashed its economic growth projection for this year to 0.7% from its previous forecast of 1.8% because the third wave of Covid-19 had a more severe impact on the country's economy.

The MPC also cut its projection for Thai economic growth in 2022 to 3.7%, down from a previous forecast of 3.9%.

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