Bad debt tops 1 trillion baht


Bad household debt for the second quarter of this year has exceeded 1 trillion baht, with homes and car loans turning into non-performing loans of more than 3.8 million baht, while debts undergoing structural adjustment are close to 1 trillion baht, according to the National Credit Bureau.

The Bank of Thailand (BOT) has expanded the coverage of household debt data to include loans from the Student Loan Fund (SLF) of around 483 billion baht and part of the cooperative debt of 265 billion baht. The national mortgage debt is now also incorporated into household debt, providing a clearer picture and resulting in the latest Thai household debt reaching 17.62 trillion baht.

However, under the new BOT data, only 70% of Thai household debt is only covered, leaving a substantial 30% unmonitored. Improved data coverage is thus crucial for comprehensive debt resolution.

According to Surapol Opasatien, CEO of the National Credit Bureau, the current total household debt stands at 17.62 trillion baht, approximately 90.6% of GDP.

The 1 trillion baht of bad debt is made up of 200 billion baht from car loans, 180 billion baht from home loans, and 250 billion baht from personal loans structured as installments, with 600-800 billion baht being agricultural debts.

Surapol said that the rising bad debt picture reflects a segment of the bad debt system that involves the court system and affects a large number of people trapped by debt. Despite measures from the central bank to prevent rapid increases in bad debt, the current level continues to rise and is expected to increase over the next six months, which is in line with the projection that the Thai economy will fully recover in mid-2027. It is thus likely that this pattern of rising and falling bad debts will continue in the foreseeable future.

The debt rate in the credit bureau system indicates that around 32 million people are affected, which translates to 23 people in every 100 having bad debts and therefore unable to access the financial system because they are bad debtors.

In this context, the most worrisome group is made up of debtors in the Gen Y and Gen X segments, which have a relatively high rate of borrowing and bad debts, especially within the 35-40 age range. Most of the problematic debtors are located in major cities and are those who borrowed for consumption. Surapol noted that these two groups have bad debts totalling over 370 billion and 270 billion baht respectively.

Urgent debt resolution is needed to help debtors return to the financial system quickly. This primarily concerns the group of debtors who incurred bad debts during Covid-19, which currently totals 490,000 accounts or around 370 billion baht. In terms of individuals, this comprises about 3.4 million people, previously considered good debtors, who encountered financial difficulties due to the pandemic.

It is suggested that this group urgently receive debt resolution support to enable them to become good debtors again in the future. The new government is urged to pay attention to these debts and provide assistance to this group that has not demonstrated prior debt default behaviour.

“The question is how to help this group. Even if we can only help 2 million of them, it's still a positive step, as helping one individual may indirectly benefit an entire family and help them return to the financial system. The policy should be directed towards helping this group of debtors,” Surapol said.