KTC readies steps in aid of borrowers affected by flood

Pornlert Benjakul, senior vice president, Collection Department, yesterday said that if the flood situation worsened and made it impossible for the company to send statements to repayment customers, it would send alerts by short message service instead.
SMS notifications normally form part of the debt-collection process for cardholders at risk of delaying repayment until after the due date, he said.
He mentioned the recent protest by rubber farmers in Nakhon Si Thammarat province, which had also affected the sending of paper statements.
Debt repayments were, however, still generally made in time despite the disruption, because KTC had sent SMS statements to its customers.
In terms of specific relief for borrowers affected by the current flooding, KTC will launch such measures once the Bank of Thailand authorises financial institutions to do so.
If the regulator grants such approval, KTC will help affected customers by reducing the minimum debt repayment from 10 per cent of the principal to 1 per cent and waiving the fee charged for debt collection, as was the case in 2011, said Pornlert.
He added that the company had changed its debt-collection strategy last year by using an in-house system instead of outsourcing companies to improve the speed of debt recovery, following the sharp rise in non-performing loans (NPLs) resulting from the severe flooding in 2011.
NPLs related to KTC credit cards in 2011 surged to 3.9 per cent from 2.8 per cent in 2010, while the company’s personal-loan NPLs rose to 4.2 per cent from 3.7 per cent in the same period.
In-house debt collection also reduces operating costs, which will help KTC to cut its debt-collection fee for both credit cards and personal loans by 10 per cent – from Bt250 to Bt225 –this year, in compliance with Bank of Thailand requirements, he said.
Krungsri Consumer was the first operator to reduce its debt-collection fee, effective August 1.
KTC’s new debt-collection strategy is focused on speed and customer-behaviour analysis, he said, while the company is ready to take quick action in response to moves by competitors and natural disasters.
Pornlert said that amidst the high level of household debt, and with a single customer often holding several credit cards, the key to success in debt collection was speed and analysis of customer behaviour.

SMS alert
“One day after the payment-due date, if customers have not repaid their debt, we will send an SMS to alert them, while in general action taken by financial houses only starts 30 days after the repayment is due,” he said.
However, with KTC’s behaviour analysis showing that some 30 per cent of cardholders cannot repay debt within the due date because they have to wait for their salary payment, the company might not take early action in regard to this segment.
The improved speed of debt collection has enabled the company to lower its NPLs, he said.
Virach Paisitsavet, KTC executive vice president and head of operations, said the company had witnessed a rising trend in the size of both temporary and permanent credit lines, in line with the high level of household debt and people’s increased expenses.
“Consideration of whether to increase a credit line is based on the customer’s income, and in general we will increase credit by no more than 20 per cent of the existing line,” he said.