Govt may use AMC to buy credit card NPLs worth 335bn: Julapun

The government may establish a new asset management corporation (AMC) or utilise an existing one to purchase non-performing loans (NPLs) from credit card users, as part of efforts to address high household debt, Deputy Finance Minister Julapun Amornvivat has announced.

The NPLs, valued at 334 billion baht, are part of the total 3.201 trillion baht in credit card loans, which constitute a significant portion of Thailand’s 13.6 trillion baht household debt.
 

Government Plans to Alleviate Household Debt

According to the Finance Ministry, banks have already classified the 334 billion baht in credit card NPLs as doubtful accounts. The government plans to negotiate with commercial banks to acquire these accounts, allowing banks to increase their capacity to provide loans to small-scale borrowers.

Julapun stated that the Finance Ministry is still considering whether to establish a new AMC or use an existing one to manage the NPLs.

Classification of Household Debt

The Finance Ministry categorises household debt into five groups, with credit card NPLs being the only type the government plans to purchase. Other debt categories include:

• Residential mortgage loans totalling 5.121 trillion baht, with 236.637 billion baht (4.62%) classified as NPLs. Instead of purchasing these NPLs, the government will encourage banks to restructure the debt, allowing borrowers to pay smaller instalments over an extended period.
• Vehicle mortgage loans worth 2.627 trillion baht, of which 333 billion baht have become NPLs. The government will not intervene, as purchasing these NPLs would result in maintenance costs for seized vehicles from defaulting borrowers.
• Revolving loans for farmers amounting to 1.66 trillion baht, with 118 billion baht classified as NPLs. The government will encourage creditor banks to manage these NPLs independently.
• Household debts outside financial institutions totalling 108 billion baht, borrowed from credit unions and pico finance firms. Around 13 billion baht of this debt has become NPLs. The government will not step in, as pico finance firms and credit unions have their own agencies to manage the loans.