One way to ease household debt would be to reduce the amount owed for those who are ready to solve their problems, says Deputy Finance Minister Krisada Chinavicharana.
He said the reduction of the burden for debtors at state-owned financial institutions is one option to ease high levels of household debt in the country, allowing them to be delisted from the National Credit Bureau’s bad debtor list.
Mr Krisada said he ordered the Government Savings Bank (GSB), as the overseer of the government’s household debt resolution project, to establish an asset management company (AMC) for efficient management of bad debt. Consolidation of bad debt from commercial banks to an AMC is possible in the future, he said.
He also tasked GSB with setting up a programme for restructuring of household debt, with a few options such as debt reduction and extension of repayment periods.
Mr Krisada said household debt has surged to 90% of GDP, or around 15-16 trillion baht, with non-performing loans (NPLs) accounting for roughly 10%. The Finance Ministry aims to reduce the country’s household debt to 80% of GDP.
He said restructuring of household debt should be beneficial to financial institutions as creditors because there is a 100% reserve for NPL debts.
As a result, if debts can be restructured and repaid, it would still be profitable for the financial institution, so he believes commercial banks should cooperate with this project.
In the past, commercial banks did not prioritise small debts, leading to persistent debts in the financial system.
Mr Krisada also chaired the presentation of awards to organisations or agencies that promote savings for the National Savings Fund (NSF), and ordered the NSF to integrate around 18 million informal workers into its retirement savings system.
Of the 18 million informal workers, 10 million are in the social security system, Section 40, which has a savings system that offers a pension (lump sum).
The remaining 8 million people are not in a retirement savings system.
The ministry wants at least 5-6 million people of the 8 million to enter the NSF retirement savings system by 2024, he said.