No controls needed on hoouseholds NPLs
The Finance Ministry has said that it sees no need to issue strict controls over non-performing household loans, though it indicated that the Bank of Thailand should oversee credit extended by commercial banks and non-banking institutions.
Finance Minister Kittiratt Na-Ranong, who is also deputy prime minister, said that after monitoring credit extended by both banks and non-banking institutions, the ministry found that the credit had been granted carefully and under strict controls. According to financial institutions, there is no irregularity of any credit extended and overdue household debt was a normal thing.
“The credit extension procedures are strict and we expect the central bank to oversee credit extension. However, financial institutions say there is no irregularity [in credit extension]. This is usual for people being unable to make instalments,” Kittiratt said.
Although the central bank does not have any authority to oversee non-banking institutions because they do not have deposits, they still remain the banks’ clients. Hence, these non-banking institutions need to be carefully controlled by financial institutions.
Previously, Bank of Thailand governor Prasarn Trairatvorakul said the central bank had been in discussion with the Finance Ministry about overseeing non-banking institutions. There have been complaints that non-banking institutions are taking advantage of low-income earners by setting high interest rates on hire-purchase loans.
