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The Thai Bankers’ Association (TBA) is launching a new debt restructuring program aimed at easing household debt, covering borrowing worth 1.4 trillion baht over a three-year period.
During a meeting of the Joint Standing Committee on Commerce, Industry, and Banking on Wednesday, TBA chairman Payong Srivanich announced that the association is preparing to suspend interest payments for vulnerable borrowers, including those with mortgages, auto loans, and small business loans, as part of a focused relief measure.
Eligible auto loan borrowers can have a maximum credit line of 700,000 baht with a financial institution, while the ceiling for mortgages and small business loans is set at 3 million baht each.
This interest payment suspension will be effective for three years and will specifically target the most vulnerable borrowers, as stated by Mr. Payong.
Vulnerable borrowers qualifying for the program are those facing repayment difficulties, although the criteria for identifying such individuals will be clarified in the future.
Data from the National Credit Bureau indicates that the combined value of special mention loans and non-performing loans is approximately 1.4 trillion baht.
“The suspension of interest payments is a short-term strategy to alleviate household debt over the next three years,” said Mr. Payong. “This will serve as the initial step for the country’s debt relief efforts, which will expand as the government outlines a broader economic policy aimed at sustainable long-term growth.”
He emphasized that the program requires approval from regulatory agencies and the cabinet, with expectations for implementation next year.
The private sector is scheduled to meet with the Bank of Thailand on November 14 to discuss the debt relief program.
Mr. Payong noted that the TBA also intends to establish a three-year fund to manage household debt.
Funding for the interest suspension initiative will be derived from a reduction in the Financial Institution Development Fund (FIDF) fee contribution from banks, along with additional contributions from the banks themselves.
The Finance Ministry will allow banks to decrease their fee contributions to the FIDF from the current rate of 0.46% on deposits to 0.23%. The remaining 0.23% is expected to be allocated to the new fund, along with further financial support from the banks to strengthen the debt relief measures.
To prevent moral hazard and ensure the effective reduction of household debt, borrowers benefiting from the suspension must comply with the debt restructuring plan and refrain from taking on new loans during the three-year period.
Eligible borrowers must have signed their loan agreements with banks prior to January 1 of this year and must be experiencing difficulties with their loan repayments as of October 31.
This initiative aims to assist targeted borrowers in reducing their debt burdens while promoting financial discipline throughout the restructuring process, according to the TBA.
