BOT announces relief measures for indebted households

Among the changes is the extension of the minimum credit-card instalment payment of 8% until 2025, from the original plan to return to the normal level of 10%.

The decision to give credit back to debtors with a minimum instalment payment of 8% or more and receiving interest every three months is expected to motivate debtors to pay off their debt more quickly.

Ronadol Numnonda, BOT deputy governor for financial-institution stability, said the central bank has issued financial measures to help debtors solve household-debt problems.

The new outline was to be presented at Friday's meeting of the Financial Institutions Policy Committee (FIPC).

Citing the plight of vulnerable debtors who are still in need of assistance as their income has not yet fully recovered, the FIPC found it urgent to make supportive measures more appropriate to the situation. Details are as follows:  
 
1. Credit Card Debt Relief

• The minimum instalment payment for credit cards will remain at 8% until the end of 2025, extended from the previous plan to return to 10% in January 2025.
• Debtors paying 8% or more will receive cashback credits of 0.5% interest on outstanding amounts in the first half of 2025, and 0.25% in the second half, paid quarterly.
• Those unable to meet the 8% threshold can restructure their debt into long-term loans before defaulting, with additional beneficial conditions such as reduced interest rates to be implemented by September 2024.
   

2. Debt Consolidation

• The BOT is encouraging financial institutions to offer more comprehensive debt-consolidation services, combining mortgage and retail loans.
• Loan-to-value ratio restrictions will be relaxed for debt consolidation cases, with the proviso that the debtor's overall burden must be reduced post-consolidation.
• This measure will be in effect until the end of 2025.

3. Assistance for Chronic Debtors

• The debt closure period for persistent debtors will be extended from five to seven years, with interest rates capped at 15% per annum.
• Service providers will be required to provide additional information to encourage responsible borrowing behaviour.
• These measures will come into effect from January 1, 2025.

Emphasising that these measures are designed to provide relief to vulnerable groups, the BOT pledged to promote responsible lending practices. 

"The central bank will closely monitor the impact of these policies and make adjustments as necessary to ensure their effectiveness in addressing Thailand's household-debt challenges," Ronadol said.