The Bank of Thailand will implement an amended guideline on responsible lending within this year to improve borrowers' debt repayment ability as a part of continued efforts to contain household debt.
The amended guideline will cover the full range of areas of household debt procedures, including before loan application, during the loan repayment period and in the case that the approved loan is classified as a non-performining loan (NPL), said governor Sethaput Suthiwartnarueput in a debt mediation event hosted by the Bank of Thailand yesterday.
Under the guideline amendment, the central bank will implement clearer regulations of responsible lending to supervise financial institutions.
The move would help reduce over-indebtedness of household borrowers in line with the central bank's direction in terms of sustainable household debt solutions, he added.
The central bank wants to see better discipline of both loan approval from financial institutions and debt payment of borrowers under the responsible lending.
Related regulatory agencies will also build up more infrastructure to allow better mechanisms on debt payment and bad-debt solution.
Mr Sethaput said Thailand's household debt ratio compared with GDP has risen significantly for the past 10 years from 60% in 2010 to 80% in 2019.
For the second quarter of 2022, the household debt ratio increased to 88% of GDP.
During the Covid-19 crisis, the central bank implemented debt relief schemes to help the outbreak-hit-borrowers.
As of September 2020, the number of borrowers participating in its debt relief measures was 12.5 million accounts, worth 7.2 trillion baht of loans, representing 40% of total loans outstanding.
However, as of June 2022, the number declined to 3.9 million loan accounts in total worth 3 trillion baht or 14% of total loans outstanding.
The Bank of Thailand has collaborated with all related parties, both government and private sector, to solve household debt sustainably.
The central bank needs to solve the problem to support the smooth takeoff of the economy amid the uneven economic rebound, Mr Sethaput said.
For this ongoing fourth debt mediation event during Sept 26 to Nov 30, there are 60 financial institutions participating the event.
The fair is being held under collaboration of the central bank, the Finance Ministry and other organisations in the public and private sectors.