The National Credit Bureau (NCB) reported that Thailand has 2.67 million debt-related cases totaling 15.99 trillion baht, with 1.05 million cases already ruled in favor of creditors.
- The debt situation of Thai people has worsened with 2.67 million cases, totaling 15.99 trillion baht, currently under legal process, nearing the country’s total household debt and GDP.
- Informal loans account for the highest amount of debt, followed by juristic person loans, with housing loans showing a worrying increase in non-performing loans due to rising interest rates.
- The Bank of Thailand’s decision to maintain the interest rate at a decade high of 2.5% has sparked concerns about the ability of low-income earners to meet increasing mortgage payments, potentially leading to more defaults.
Around 691,000 cases, amounting to 761 billion baht, are currently in the legal execution process. The majority of debt comes from informal loans, followed by juristic person loans, personal loans, hire purchase loans, and credit card loans.
Housing loans are a major concern, with over 180 billion baht in non-performing loans and a significant increase in defaults. The rise in interest rates is cited as the main reason for mortgage defaults, with people earning less than 20,000 baht per month facing difficulties.
The Bank of Thailand’s Monetary Policy Committee recently voted to keep the rate at 2.5%, a decade high, despite calls for a rate cut to stimulate the economy.
Government’s Determination to Tackle Debt Problems
Prime Minister Srettha Thavisin has reaffirmed the government’s commitment to addressing both formal and informal debt issues within the span of his administration’s 4-year term. The progress made in the past two months reflects the sincere intention of the administration to assist people in breaking free from the burden of debt.
Groups of Debtors and Progress Made
Debtors are categorized into four main groups, including those affected by the pandemic, individuals with excessive debt obligations, farmers with irregular incomes, and those with non-performing loans. Prime Minister Thavisin highlighted the successful registration of 140,000 informal debtors for government assistance, leading to mediation and resolution in over 57% of cases. The government’s next steps include securing low-interest funding for defaulting debtors and ensuring they do not accumulate new debts.
High household debt poses a threat to the economic and financial stability of Thailand, as it reduces the purchasing power and savings of consumers, limits their ability to invest in education and health, and increases their vulnerability to income shocks and interest rate changes. Moreover, high household debt can also affect the banking system, as it increases 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 some measures to address the household debt problem in a sustainable manner. These include improving financial literacy and debt management skills among consumers, enhancing consumer protection and responsible lending practices, providing debt relief and restructuring programs for distressed borrowers, promoting income diversification and social welfare schemes, and supporting economic recovery and growth.
