BoT offers borrowers debt holiday

Most deferments to last until June

The Bank of Thailand has extended financial relief measures to individual borrowers until June this year, aiming to ease financial burdens stemming from a new round of the domestic Covid19 outbreak.

Ronadol Numnonda, deputy governor for financial institutions stability, said the central bank has extended and added financial relief measures to both retail and commercial borrowers whose loan status remains classified as performing loans.

For retail borrowers, financial relief measures have been extended to June 30, 2021 after they had expired on Dec 31, 2020.

Under the extended relief measures for consumer finance products, the regulator allows financial institutions, including commercial banks, specialised financial institutions (SFIs) and non-bank companies, to provide financial assistance to borrowers on a case-by-case basis.

Debtors can apply for financial assistance by themselves. Employers or business owners can also apply for such assistance on behalf of debtors.

Welfare loans are a prime example of employers applying for financial assistance on behalf of debtors. Such financial assistance must receive the consent of debtors who are employees or contract workers in order for such assistance to initiate efficiently and timely.

For credit cards and personal loans, the regulator allows changing the status of unsecured loan products to be termloan products, or rescheduling the loan period to a maximum maturity of 48 months. Ceiling interest rates per year are capped at 12% for credit cards and 22% for personal loans.

For revolving loans and car title loans, the regulator allows financial institutions to reduce monthly debt repayment by 30% at a minimum from the existing amount, with the interest rate capped at 22% per year.

Mr Ronadol said the central bank also allows deferment of debt repayment, covering both principal and interest, for vehicle hire-purchase loans for three months, or reduction of monthly instalment payments through debt rescheduling.

The central bank annulled the credit line regulation of hire-purchase loans from a maximum of 35,000 baht for motorcycles and 250,000 baht for cars.

The debt holiday measure also applies to mortgages. The central bank allows borrowers to defer both principal and interest payments for three months, or to defer principal repayment for three months and reduce interest payments based on borrowers’ ability, or to extend the debt repayment period by reducing monthly instalments.

The existing debt relief measures for commercial borrowers, especially small and medium-sized enterprises (SMEs), still apply until June 30 this year. They cover debt restructuring, offering additional credit lines and relaxing of other loan conditions.

The central bank allows deferment of debt repayment by SMEs whose credit line is no more than 100 million baht, under the 500-billion-baht soft loan decree.

“The central bank will work with financial institutions on monitoring new infections, borrowers’ applications for debt relief measures and their capability in loan repayment,” said

Mr Ronadol.

“If additional measures are needed, the Bank of Thailand is ready to implement them.”

Debt deferment is a temporary instrument, so helping clients to restructure debts in line with their repayment ability is a longer-term solution, he said.

Some financial institutions already offered financial aid to their borrowers during the pandemic.

As of November 2020, borrowers applying for debt relief measures amounted to total outstanding loans of 5.6 trillion baht from 11 million loan accounts. Of those, 3.22 trillion baht were retail loans largely derived from commercial banks and SFIs.