Wednesday, September 30, 2020

Debtors hit by Covid-19 get relief from second slew of BOT measures

Jun 20. 2020
Ronadol Numnonda, BOT Deputy Governor of Financial Institutions Stability
Ronadol Numnonda, BOT Deputy Governor of Financial Institutions Stability
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By The Nation

The Bank of Thailand (BOT) has issued the second phase of measures to help debtors suffering from the Covid-19 impact, Ronadol Numnonda, BOT deputy governor of Financial Institutions Stability, said on Friday (June 19).

He explained that the BOT had discussed with financial service providers to implement the second phase of measures to help debtors:

1 Reducing the interest rate ceiling for credit cards and personal loans by 2 to 4 per cent per year, starting from August 1.

The interest rate ceiling for credit cards will be cut to 16 per cent per year from 18 per cent per year; 25 per cent per year from 28 per cent per year for revolving loans and instalment loans; and 24 per cent per year from 28 per cent per year for car cash.

2 Increasing credit card, revolving loan, and instalment loan limit from 1.5 times of debtors’ income to two times of debtors’ income for debtors who have shown good behaviour and have income lower than Bt30,000 per month, starting from August 1 this year to December 31 next year.

3 Provide alternative measures to help debtors hit by the Covid-19 who do not have non-performing loans.

Financial service providers must provide alternatives to debtors, such as reducing the minimum payment rate depending on debtors’ ability to pay debt, changing term loan, reducing instalment rate, and postponing the payment.

In addition, financial service providers must provide information for debtors, such as debt repayment plan, number of instalments, and additional interest that debtors have to pay after the postponement.

Moreover, financial service providers cannot call for prepayment fee or other charges on debtors because alternative measures are not considered a default in payment.

Debtors who are interested can contact financial services providers via smartphone application, website, call centre, or SMS message from July 1 to December 31 this year.

4 Financial service providers must restructure debt, focusing on their ability to pay debt in order to relieve debtors’ burden, such as extending the repayment period, changing the term loan, postponing payment, cutting interest, and delaying confiscation.

“The BOT believes that the second phase of measures will help relieve debtors’ burden and reduce the cases of default in payment,” Ronadol said.

“Meanwhile, this measure will help financial services providers to manage risks and treat debtors equally.”

He added that BOT will monitor the situation closely.

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