The Bank of Thailand plans to hold a new debt mediation event in an effort to ease the country's swelling household debt and help vulnerable borrowers restructure debt amid the uneven economic recovery.
Ronadol Numnonda, the central bank's deputy governor, said yesterday household debt stood at 14.6 trillion baht.
The central bank has been concerned with some loan products, particularly unsecured loans such as credit cards and personal loans, which represent 23% of total household debt.
Secured loans, which improve the well-being of consumers and create careers for people, represent a large portion of the household debt, said Mr Ronadol.
Secured loan products include mortgages, auto loans and commercial loans for entrepreneurs or small businesses.
The impact of the pandemic the past two years has pressured the household debt ratio to increase from 80% of GDP in 2019 to 90% in 2021. This increase of the household debt ratio is mainly attributed to the fall of nominal GDP by 7% during the period, while household loans increased, he said.
The central bank, in collaboration with the Finance Ministry and other organisations in the public and private sectors, scheduled the online debt mediation event for Sept 26 to Nov 30.
Seven types of retail loan products are included in the debt mediation, comprising credit cards and personal loans; auto loans; bad loans under asset management companies (AMCs); car title loans; motorcycle loans; nanofinance; and all loan products from specialised financial institutions (SFIs).
There are 56 financial institutions registered to join the debt mediation event, including commercial banks, non-banks, AMCs and SFIs.
Mr Ronadol said the number of participating creditors is expected to increase.
At the past three debt mediation events, around 80% of participants entered debt restructuring programmes, he said.
The central bank wants the borrowers, who cannot be contacted by their financial institutions, to join this event or enter normal debt restructuring programmes offered by their financial institutions, said Mr Ronadol.
He said the Bank of Thailand will help viable but fragile borrowers with debt restructuring as an instrument to ease the household debt problem.
Many borrowers during the pandemic entered into debt restructuring schemes and most of them successfully exited, said Mr Ronadol. Some of them still require financial aid as they have a higher cost of living, but their income has not returned to normal amid the uneven economic rebound, he said.
The central bank plans to maintain debt assistance measures until the end of next year.
As of June 30, there were 3.89 million loan accounts in debt assistance programmes, accounting for 2.89 trillion baht in loans.
In addition, the central bank extended its long-term debt restructuring programme until the end of 2023.
Mr Ronadol said the central bank plans to implement guidelines on responsible lending this year after issuing a responsible lending framework to contain the country's household debt.