The Finance Ministry has given the state-owned Government Savings Bank (GSB) the go-ahead to expedite legal action against teachers who are threatening to stop repaying their loans.
Finance Minister Apisak Tantivorawong said he received a report on the matter, adding that the bank has come up with several measures for debtors.
Any teachers who have failed to pay off their debts to the bank in due time will face prosecution. Furthermore, teachers who face lawsuits will end up being dismissed from government service, the minister said.
He added that teachers who plan to default on their debts are mostly retired.
He referred to the GSB's loan programme for members of teachers' funeral funds.
The loans allow teachers to repay debts to other financial institutions or informal creditors, buy homes, vehicles, shares, start a business, or pay for other key transactions.
Mr Apisak said the GSB has offered a debt restructuring programme to help teachers by offering a reduction of interest by 1%-2% and a three-year moratorium on principal payments.
Currently, the GSB has about 450,000 debtors who are teachers. Of them, about 400,000 have repaid their debts, with only 20,000-30,000 cases of non-performers.
Leaders of a network of professional teachers met in Maha Sarakham on Saturday and said their 450,000 members planned to stop paying off their debts to the GSB from next month.
Ouaychai Wata, head of the professional teacher's network, said after the meeting that the GSB was raising interest rates to astronomical levels.
The borrowers under the programme currently owe more than 418 billion baht.
Moreover, borrowers were being forced to buy life insurance from the bank, he added.
Each debtor was allowed to borrow up to 3 million baht, with their repayments spread over a maximum of 30 years.
The teachers' network demanded the government approve a six-month moratorium on repayments starting Oct 1, to be followed by an interest rate cut to 1%. Teachers now pay interest rates of between 5%-7% on loans.
On Wednesday, the GSB issued a circular to all its branches nationwide to speed up lawsuits against teachers and other education industry personnel who default on their debts.
According to the document released to the media, the debtors are divided into two groups. The first group are those whose loan contracts have been terminated by the bank. Lawsuits must be filed against them by the end of this month.
In cases of debtors whose loan contracts need to be terminated, action must be taken to terminate their contracts by next month.
As for the second group of debtors, the bank is in the process of issuing debt collection letters and notifications of contract termination to them.