Debts under legal process almost as high as Thailand's GDP

The amount of debt under legal process is fast approaching Thailand’s total household debt of 16 trillion baht and the country’s gross domestic product (GDP) of 17 trillion baht, NCB chief executive Surapol Opasatien said.

The NCB on Wednesday reported a total of 2,674,081 debt-related cases as of November 2023, valued at 15.99 trillion baht.

In 1.05 million cases, amounting to around 15 trillion baht, verdicts have already gone in favour of the creditors, but they are yet to enter the legal execution process Surapol said.

Around 691,000 cases, amounting to 761 billion baht, are currently under the legal execution process. This could mean the debtors being forced to sell off their houses, cars or other assets to pay off the debt, Surapol explained.

When divided by types of debts, those from informal loans were the highest at over 1.75 trillion baht, followed by juristic person loans at 1.01 trillion baht, personal loans at 215 billion baht, hire purchase loans at 84 billion baht, and credit card loans at 44.3 billion baht.

Surapol added that housing loans were the most worrying. More than 180 billion baht of debts had already become non-performing loans (NPLs), increasing 7% year on year in 2023. Meanwhile, the amount of housing debts in the SM category (defaulting not more than 90 days) rose to 178 billion baht, soaring 31.1% year on year in 2023.

Surapol attributed the hike in interest rate as the main reason for the defaults in mortgages. “If the interest goes up by 0.25%, people who earn less than 20,000 baht per month would have trouble paying their increasing mortgage and start defaulting,” he said.

Earlier this month, the Bank of Thailand’s Monetary Policy Committee voted 5:2 in favour of holding the rate at 2.5%, which is almost a decade high, amid months of falling inflation and pleas from several sectors to cut the rate to boost the economy.