BOT to urge banks to tone down adverts

The move comes after recent efforts by such institutions to attract borrowings via ads that often include the offer of rewards for taking out loans.

BOT Governor Prasarn Trairatvorakul yesterday said the central bank would invite executives of financial institutions to discuss their media advertising spots and ask them to rein in what the BOT considers to be over-persuasive ads for taking out loans.

The concern is that this could lead to a behavioural change among individuals from the "saving-before-spending" culture, he said.

"Recently, banks’ and non-bank institutions’ advertisements have been relatively persuasive for taking out borrowings," Prasarn said.

"They mostly convey a message of borrowing, and being rewarded for doing so. We are quite concerned about this trend," he added.

While the level of household debt and associated non-performing loans is relatively small when compared with overall debts in the financial system, the central bank is concerned over the household |debt level and is monitoring the figures closely.

"There is some concern over household debts but, taken overall, the system has not been affected," he said.

"We are keeping an eye on it as low-income earners’ household debts have risen to a relatively high level, compared to their repayment ability. We have asked commercial banks to be more careful and try not to persuade people to borrow," he added.

BOT Assistant Governor Paiboon Kittisrikangwan stressed that although some groups’ household debts, such as personal loans, had increased, the ratio of the household debt to financial institutions’ total debt was not high, and was at a level that could could not affect the overall financial sector.

Public complaints about some institutions’ credit-card services, such as high debt-collection fees, could be included in the discussion on December 3.