BOT works to curb rising household debt

In addition to closely monitoring the situation, the BOT is pushing for long-term debt solutions, covering all stages of debt, including new debt creation, managing existing debt, and facilitating public access to the credit system.

Speaking at a media briefing on July 3, assistant governor of the BOT’s Financial Institutions' Supervision Group Suwannee Jatsadasak said the central bank is focusing on support for debtors to facilitate their debt management.

The proportion of household debt to GDP has gradually declined from its peak during the Covid-19 period. As of the first quarter of this year, household debt stood at 16 trillion baht, accounting for 90.6% of GDP. The number of accounts and the amount of overdue debts exceeding 90 days resulting from the impact of Covid-19, have gradually decreased from their peak in October 2021 due to the acceleration of specialised financial institution debt restructuring.

The BOT will expedite sustainable solutions to address household debt, encompassing comprehensive and principle-based approaches, and collaborating with all sectors. The proposed measures will cover the entire debt cycle, including quality assessment of new debt, management of existing debt, particularly non-performing loans (NPLs) and problematic debts, as well as facilitating public access to credit within the system, Suwannee said.

However, effectively and sustainably resolving household debt issues requires cooperation from other sectors to extend the impact to the remaining 30% of household debt that is not under the BOT's supervision.

This includes such initiatives as promoting financial literacy and discipline among debtors, encouraging responsible lending practices throughout the system, enhancing evaluation and tracking systems for debt, and promoting income generation and debt relief, Suwannee added.