BoT to help shield debtors from rate shock

The Bank of Thailand will support vulnerable debtors to help them deal with the impact of rising interest rates, a deputy governor said on Tuesday.

Assistance will be available in line with debtors’ debt servicing ability, Ronadol Numnonda said at a news conference.

Later this month, the central bank will also issue guidelines to tackle household debt, including handling existing debt and offering new responsible lending, he said.

Some borrowers with combined debt of 12 billion baht had received support under a scheme introduced earlier, Mr Ronadol said.

The central bank has raised its policy rate four times since August and suggested further increases are possible to keep inflation in check.

Average headline inflation hit a 24-year high of 6.1% last year, far above the central bank’s target range of 1% to 3%. In November, it predicted inflation would drop to 3% in 2023.

Commercial as well as state banks began raising their deposit and lending rates for the first time in nearly three years after the BoT’s most recent move, which brought its benchmark rate to 1.50%.

Household debt in Thailand is among the highest in Asia, equivalent to 86.8% of gross domestic product in the third quarter of 2022.

The high level of household debt could disrupt economic recovery and needs to be brought down to sustainable levels, according to BoT Governor Sethaput Suthiwartnarueput.