Central bank considering PM’s suggestions to ease financial burden

The Bank of Thailand (BOT) said it is considering four suggestions made by Prime Minister Srettha Thavisin during his meetings with economic ministers, adding that all possible impacts are being carefully studied before implementation.

The suggestion with the highest priority is to reduce the minimum monthly repayment for credit cards from the current 8% to 5% in a bid to help alleviate people’s financial burden, Chayawadee Chai-anant, BOT’s assistant governor for corporate relations, said on Wednesday.

“We have discussed this with credit card operators, both banks and non-banks, to get their inputs on the current situation before making the decision, which should be reached by the end of this month,” she said.

Chayawadee pointed out that reducing minimum repayment could further increase non-performing loans (NPLs) from credit cards, which currently affect about 1.1 million cards, plus another 200,000 cards that are about to exceed the 90-day default period.

Another suggestion is for the BOT to relax its LTV (loan to value) measure, which limits the amount of housing loans granted based on revenue and credit history of borrowers, in a bid to allow more people to purchase their houses.

Chayawadee said the BOT has been looking into obstacles that prevent borrowers from obtaining loans for property priced from 1-3 million baht, and found that the loans were rejected mostly because borrowers’ incomes have changed.

“Relaxing the LTV measure might not help fix the problem at its root, and could even have a negative impact on the property market,” she said. “The BOT believes that the LTV measure need not change at the moment, but we are ready to adjust the measure following a change in the economic situation.”

Chayawadee added that the remaining two suggestions were not considered urgent and required more data collection and study. They are the adjustment of inflation target and reducing the length of time bad debtors remain on the National Credit Bureau (NCB)’s blacklist, which aims to help debtors access new loans from legal lenders sooner.

Srettha suggested that the current duration of five years on the NCB blacklist, plus an additional three years of record-keeping, is too long, and should be shortened to 1-2 years plus 3 years of record-keeping instead.