Thailand’s soaring personal loans trigger concerns about people’s liquidity

Thailand's household debt in the third quarter of 2023 came in at 16.2 trillion baht, marking a 3.3% year-on-year increase and accounting for 90.9% of the country’s gross domestic product (GDP).

Non-performing loans (NPLs), meanwhile, came in at 152 billion baht, accounting for 2.79% of total loans.

The surge in household debts in Thailand has been attributed to the 15.6% expansion in personal loans, especially car loans, which rose by 40.2% year on year.

“This reflects people’s lack of liquidity, as car loans are usually approved quickly and easily,” NESDC secretary-general Danucha Pichayanan said on Monday.

However, he said, auto loans are given at a far higher rate of interest and are usually the last option when it comes to boosting liquidity.

Danucha said NESDC will follow up on household debt-related issues with the following measures:

• Providing guidelines for responsible lending practices to tackle household debt, especially for people with persistent debt

• Tackling the rise in personal loans

• Dealing with informal debt, which includes following up on debt mediation, easing loan granting regulations among state financial institutions and monitoring debtors’ repayment potential

“People should be granted easier access to loans, especially the self-employed sector, who have unstable income and may contribute to more NPLs in the future,” he added.