The Finance Ministry is promoting joint investment by specialised financial institutions (SFIs) and asset management companies (AMCs), setting up joint venture asset management companies (JV-AMCs) to assist debtors that have 3 million accounts with a total value of 230 billion baht, says Paopoom Rojanasakul, secretary to the finance minister.
He said setting up joint ventures between SFIs and AMCs, with each controlling 50%, will solve the problem of SFIs being limited in managing non-performing loans (NPLs).
According to the law, SFIs cannot accept debt haircuts, causing retail NPLs at SFIs to accumulate.
Moreover, the debt collection cost is not worth the amount of debt, causing bad debts to persist at SFIs.
According to a cabinet resolution in December 2023, it approved measures to assist debtors via JV-AMCs and to reduce the interest burden for debtors, in line with government policy.
The ministry expects the measures to help SFIs with debt restructuring, allowing more flexibility, aligning with the government's policy of resolving debt in an integrated manner.
SFIs can jointly invest to establish JV-AMCs and transfer some of their debt (not exceeding 20 million baht) to the JV-AMC. Debtors can then restructure or write off some of the debt.
Debt restructuring will be provided at least once, including a reduction of instalment payments and the suspension of principal payments, said the ministry.
The Bank of Thailand is considering issuing an announcement to set criteria to promote the JV-AMCs. An announcement is expected later this month.
In addition, the Government Savings Bank (GSB) is in talks with Bangkok Commercial Asset Management Plc, which has expertise in debt restructuring, about setting up a JV-AMC.
GSB expects to begin operations of the JV-AMC within the first quarter this year.
In the first phase, the joint venture would help debtors of GSB, then extend assistance to debtors of other SFIs in the next period.