Committee agrees to ease debt reporting requirements

The records of some 600,000 debtors will be removed from the database of the National Credit Bureau (NCB) after the Credit Information Protection Committee agreed to ease debt reporting requirements.

Bankers doubt the relaxed regulations will lead to higher bad loans.

The committee granted approval to the NCB to report the payment history of debtors with at a least 90-day overdue payments to the credit bureau for five years, and such records will be held on the NCB’s database for another three years before being deleted, said Ronadol Numnonda, the Bank of Thailand’s assistant governor of the supervision group and secretary of the committee.

Current regulations require NCB members to report the payment records of debtors who default until the overdue debt is paid off.

The loosened requirements are aimed at reducing the obstacles to accessing credit and encouraging debtors who turn to loan sharks to turn to the formal lending system.

Non-performing loans are defined as loans overdue by more than 90 days.

“The purpose of this move is to alleviate the difficulty of debtors, as the credit records of those who have missed payments since the 1997 financial crisis remain on the NCB database and this prevents them from accessing formal financial sources,” said Mr Ronadol.

Regarding debtors who have settled overdue payments but whose details still remain on the NCB database, the committee is considering whether to reduce the period such details are retained, he said.

A consumer’s credit history is one factor that financial institutions take into account before providing loans. Debt-servicing ability and other financial standards are also considered.

The committee has also allowed thrift cooperatives and credit unions to become members of the NCB on a voluntary basis, Mr Ronadol added.

Four thrift cooperatives and credit unions have expressed interest in joining the NCB.

They are the Office of the Permanent Secretary of Defence Saving and Credit Cooperative, Khon Kaen Teachers Thrift and Credit Cooperative, Ibnu Affan Islamic Cooperative and Kasetsart University Savings and Credit Cooperative.