BOT looks at ways to control household debt

“The central bank will pay more attention to the surge in household debt, as it has gone up to 40-50 per cent of household income from 30 per cent previously,” Deputy Governor Krirk Vanikkul said yesterday.
This debt burden does not include underground borrowing.
“Too high household debt could pose a risk to the whole economy’s stability, so the central bank does not want it to rise too much. However, whatever measures we impose won’t affect those who are in need of liquidity,” he said.
The central bank will also try to ensure that creditors do not take advantage of debtors.
“We have tools in place such as credit-card regulations. We may revise these rules” to contain household debts, he said.
A study in the United States suggests that the appropriate debt level should be about 28 per cent of income.
Banks and other financing firms have been luring borrowers via advertising campaigns. This has played a part in the rapid growth of household debt, particularly for instalment loans.
Many non-banks charge high interest rates and they are not subject to central bank regulations.
MR Pridiyathorn Devakula, a former BOT governor, will be invited to give advice to the central bank on proper measures, Krirk said.