Banks agree to suspend interest for household debts in rehab
Measure aimed to protect debtors’ assets from seizure, triggering new wave of financial crisis
Commercial banks have agreed to suspend interest charges for small-time borrowers who enter the debt rehabilitation programme aimed at helping them keep houses, vehicles and factories bought on credit.
The Thai Bankers Association (TBA) agreed to the suspension during a meeting with the Finance Ministry, Office of the National Economic and Social Development Council and Bank of Thailand on measures to help vulnerable groups facing difficulties repaying loans.
The government sought help from the TBA amid a sluggish economic recovery that has seen household debt soar.
The interest suspension aims to prevent financial crisis by protecting vulnerable debtors against losing their homes or vehicles needed to make a living, as well as SMES from having their premises seized by banks.
The TBA is currently drafting criteria to determine small-time debtors’ eligibility for the debt rehabilitation programme.
It has so far agreed to allow debtors with household loans obtained before January 1 this year to enter the rehabilitation programme.
Debtors in the rehab programme repay only the principal with no interest charges.
If the debtors complete the programme on schedule, banks will exempt them from interest charges, the TBA added.
They must also refrain from borrowing more during the rehabilitation period.
