3-year debt moratorium proposed
The Finance Ministry has proposed a three-year debt moratorium for state-bank customers who owe no more than Bt500,000, according to an informed source at Government House. If the measure is approved by Cabinet next week, it will cost taxpayers Bt22.85 b
Loans eligible for this scheme must not be labelled as non-performing. It will affect debts owed to state-run banks taken on before April 17 this year. Mortgages, leases and personal loans to those who have a regular income are excluded.
Borrowers must not receive privileges of lower-interest loans.
The ministry expects the new scheme to cover 3.76 million borrowers with combined outstanding loans of Bt459.11 billion.
They will get an interest reduction by 3 percentage points from September 1 this year through August 31, 2015. Or they can choose to suspend payments on the principal for three years plus the 3-percentage-point interest-rate cut.
The ministry is asking the Cabinet to provide a subsidy of Bt22.85 billion to support state-run banks that participate in the project.
Critics have expressed fears that such a debt moratorium would be a moral hazard, which could harm state-run banks and shift the burden to taxpayers.
However, Deputy Finance Minister Tanusak Lekuthai defended the policy as an opportunity for low-income groups.
The government has already offered debt suspension for non-performing borrowers. According to the Finance Ministry, 641,895 people with combined debts of Bt77.98 billion have applied for a moratorium, and 428,729 had been approved with combined debts of Bt52.35 billion.
The deadline for this scheme was April 15.
