The number of retail borrowers seeking assistance via the central bank’s Debt Clinic programme surged by 43% in the first quarter, indicating a growing resolve among financially vulnerable individuals to address non-performing loans (NPLs).
According to Sukhumvit Asset Management (SAM), the country’s second-largest asset management company overseeing the Debt Clinic, a total of 20,267 individual borrowers applied for the scheme designed to restructure unsecured debts, marking a 43% increase compared to last year’s first quarter.
Of these applicants, 14,311 were deemed eligible for assistance, representing a substantial 58% year-on-year rise. Among them, 7,145 borrowers, with combined principal loans amounting to 1.62 billion baht, opted to enter the debt restructuring process.
At present, there are 46,720 borrowers of unsecured loans undergoing debt restructuring, covering a total of 129,959 loan accounts and outstanding loans worth 9.46 billion baht.
On average, the credit line per borrower falls within a range of 5,000 to 200,000 baht, with an average monthly debt instalment of 2,470 baht. The longest restructuring period covers 92 months.
The majority of participants in the debt restructuring project belong to Generation Y, comprising 65% of the total, while the remaining 35% are members of Generation X.
Nartnaree Rattapat, president of SAM, said the number of NPL borrowers who have not pursued legal action but instead opted to participate in the Debt Clinic programme has shown a steady increase.
This indicates that borrowers are paying more attention to debt solutions after the household debt problem affected their daily lives, she said.
The collaborative efforts of various stakeholders, including the Bank of Thailand and 32 financial institutions participating in the debt restructuring programme, have played a pivotal role in addressing the household debt challenge.
Moreover, the central bank’s relaxation of Debt Clinic conditions since its implementation in June 2017 has facilitated greater access for unsecured NPL borrowers.
“Seven years since the implementation of the Debt Clinic, around 3.35% of all borrowers have successfully completed debt restructuring and exited the programme, with combined loans worth 288 million baht,” said Ms Nartnaree.
SAM anticipates that around 55,000 unsecured loan accounts classified as NPLs will join the Debt Clinic programme this year.
Under the Debt Clinic criteria, the programme caters to NPLs arising from credit cards, cash cards and personal loans with debt default periods exceeding 120 days.
It offers special interest rate adjustments ranging from 3-5% annually, depending on the chosen debt instalment plan, with a maximum repayment period of 10 years. Additionally, the Debt Clinic programme extends to retail NPL borrowers aged up to 70 with total debt burdens not exceeding 2 million baht.