The National Credit Bureau (NCB) in Thailand has disclosed that the country is currently facing 2.67 million debt-related cases, amounting to 15.99 trillion baht. Additionally, out of these cases, 1.05 million have been ruled in favor of creditors.
The debt situation in Thailand has deteriorated considerably, with informal loans constituting the bulk of the debt, followed by juristic person loans. Housing loans, in particular, have experienced a notable increase in non-performing loans due to escalating interest rates.
The decision by the Bank of Thailand to uphold the interest rate at 2.5%, a decade high, has raised concerns about low-income individuals meeting their mortgage payment obligations, possibly resulting in further defaults. Currently, about 691,000 cases, totaling 761 billion baht, are undergoing the legal execution process, predominantly stemming from informal loans, juristic person loans, personal loans, hire purchase loans, and credit card loans. Housing loans, constituting a significant portion of the debt, have seen over 180 billion baht in non-performing loans, particularly due to an upsurge in defaults precipitated by rising interest rates, affecting individuals earning less than 20,000 baht per month.
Prime Minister Srettha Thavisin has affirmed the government’s dedication to tackling both formal and informal debt issues within the four-year term of his administration. Notably, the administration has shown progress over the past two months, with the sincere intention to assist citizens in resolving their debt burdens. Categorized into four main groups, debtors range from those affected by the pandemic, individuals grappling with excessive debt obligations, farmers with irregular incomes, and those contending with non-performing loans. The government has successfully registered 140,000 informal debtors for assistance, leading to mediation and resolution in over 57% of cases. Future steps include securing low-interest funding for defaulting debtors and preventing the accumulation of new debts.
The high household debt in Thailand presents a significant threat to the country’s economic and financial stability, impacting consumer purchasing power, savings, investments in education and health, and susceptibility to income shocks and interest rate fluctuations. Moreover, this situation can affect the banking system by heightening the risk of loan defaults and non-performing loans.
The Bank of Thailand (BOT) and the National Economic and Social Development Council (NESDC) have proposed various measures to address the household debt problem sustainably. These measures encompass enhancing financial literacy and debt management skills among consumers, bolstering consumer protection and responsible lending practices, providing debt relief and restructuring programs for distressed borrowers, encouraging income diversification and social welfare schemes, and supporting economic recovery and growth.
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