BOT pushes for JVAMC to tackle bad debt of 4 million small borrowers

The “BAM Symposium 1ST: New Era of AMC — Reviving Assets, Driving Thailand’s Economy,” organised by Bangkok Commercial Asset Management Plc (BAM) on October 28, 2025, at Dusit Thani Hotel, became a key forum for uniting Thailand’s asset management industry to seek solutions to the country’s mounting non-performing loan (NPL) problem.

The event shed light on the fragile state of household debt and explored strategies to revitalise distressed assets, turning them into new sources of value. Speakers also underscored the pivotal role of asset management companies (AMCs) as a “mechanism for economic recovery”, absorbing bad debts while restoring opportunities for debtors to re-enter the financial system.

Bank of Thailand (BOT) Governor Vitai Ratanakorn stressed that one of the most pressing challenges facing the Thai economy is the persistently high level of household debt, which continues to weigh on consumption and investment.

Although household debt has fallen to about 86% of GDP, Vitai warned that the situation remains worrying, particularly with the rising share of loans entering delinquency. Currently, non-performing loans account for nearly 4%, while another 8–9% fall into the special mention (SM) category, loans at risk of becoming bad debt. Combined, they represent around 11–12% of the total, signalling a critical issue for financial stability.

Vitai emphasised the urgent need to expand the role of AMCs to help debtors recover financially and reintegrate into the formal economy, calling this a vital step towards strengthening Thailand’s long-term economic resilience.

The BOT is finalising a revised regulation on the establishment of Joint Venture Asset Management Companies (JVAMCs), after the previous directive expired at the end of last year. The central bank expects to complete the amendment within the next two to three days, paving the way for financial institutions to set up new JVAMCs.

The revision aims to increase flexibility for AMCs and commercial banks to jointly resolve NPLs, particularly for distressed retail borrowers struggling with repayments. Allowing new JVAMCs to be formed will make debt management more efficient, systematic, and accessible to a broader base of debtors.

Once the new regulation takes effect, several financial institutions and AMCs are expected to collaborate in establishing JVAMCs, as many banks have shown interest in playing a more active role in debt rehabilitation amid worsening household debt conditions. AMCs are seen as crucial in absorbing bad debts from the financial system, thereby easing the burden on banks and giving debtors a better chance to restructure under more lenient terms.

In the past, AMCs absorbed around 20% of bad debt in the system, but the figure has since dropped to roughly 10%, signalling significant room for expansion. The revised regulation is therefore designed to stimulate new players in the AMC market and enhance the overall capacity for structured debt management.

Looking ahead, the central bank hopes to see AMCs increase their role in purchasing NPLs back to 20–30% of total system debt, which would help reduce delinquent loans and address the household debt crisis at a structural level—allowing former debtors to regain financial stability and re-enter the economy.

BOT, Finance Ministry to launch AMC scheme for small debtors within two weeks

Alongside expanding the role of AMCs, the BOT is working with the Finance Ministry and the Thai Bankers’ Association to roll out a debt relief programme for small borrowers with debts under 100,000 baht, a group severely impacted by the prolonged economic downturn.

The scheme will cover around 4 million debtors nationwide and will be implemented in phases. The first phase, now in its final negotiation stage, is expected to begin within one to two weeks. It will focus on transferring NPLs from borrowers with debts of no more than 100,000 baht, covering roughly 1.5–2 million debtors to ensure proper management and recovery opportunities.

In the first phase, around 700,000 NPL accounts from commercial banks will be transferred to Sukhumvit Asset Management (SAM), while about 800,000 accounts from non-bank subsidiaries of commercial banks and 400,000–500,000 accounts from state-owned banks will be transferred to Ari AMC, co-owned by GSB and BAM.

While the transfers may not immediately reduce Thailand’s total household debt ratio, the programme is expected to help millions of debtors escape bad-debt status through more flexible restructuring terms, allowing them to reintegrate into the formal economy.

Vitai described the revised JVAMC regulation and the expanded AMC role as a “critical step” toward resolving Thailand’s household debt crisis.

“What we want to see is debtors who have defaulted being able to return to the system through more flexible AMC management. If we succeed, this will not only alleviate household debt but also strengthen economic stability and ensure long-term financial resilience,” Vitai said.

AMCs seen as the “monkey’s cheek” of Thailand’s financial system

Rak Vorrakitpokatorn, President and CEO of BAM, said that as Thailand’s financial system faces a growing wave of NPLs, AMCs must serve as the “monkey’s cheek”, a reservoir to absorb bad debts before they overflow and undermine overall financial stability.

He emphasised that an AMC’s mission is not merely to liquidate or auction off assets but to turn bad loans into performing ones (RPLs) by helping debtors rebuild their financial health. “Our real goal is not just to settle debts but to help people stand on their own feet again,” he said.

Rak noted that today’s bad debt structure is far more complex than during the 1997 Tom Yum Kung crisis, when NPLs peaked at around 38–42%. Although the current NPL ratio stands at just 3%, the debts are now fragmented and harder to resolve. “Even with more than 90 AMCs in operation, the system still struggles to cope with the new and fast-rising wave of distressed loans,” he added.

Thailand’s household debt, though reduced to 86% of GDP, remains significantly higher than the ASEAN average of 63%, he said, adding that informal debt continues to be a hidden and deeply entrenched issue.

Another worrying trend, Rak noted, is the rising loan rejection rate, particularly among SMEs and retail borrowers, some as high as 60–67%, signalling tightening financial conditions.

Currently, the total NPLs managed by AMCs exceed 1 trillion baht, and this figure could soon surpass 2 trillion baht, including 500 billion baht from commercial banks and over 300 billion baht from state-owned specialised banks.

“If these debts remain unresolved, they will become a long-term drag on Thailand’s economy,” he warned. The key challenge for AMCs, he said, is to convert NPLs into RPLs quickly through measurable debt-repayment tracking, for example, consistent payments for 12–18 consecutive months.

Major banks in talks with BAM to form new JV AMCs as sector rallies to fix household debt

As the BOT prepares to issue a new regulation allowing the establishment of JVAMCs, BAM has begun negotiations with three major commercial banks to form new joint ventures.

BAM currently operates JVAMCs with two banks. If partnerships with the three new banks materialise, the company expects to absorb hundreds of billions of baht in distressed assets into the system, with negotiations expected to conclude by the end of November.

“The beauty of a joint venture, or what I call a marriage, is that it’s very different from a direct purchase,” the BAM executive explained. “When you buy directly, you must take the whole portfolio in bulk, regardless of quality, and usually at a discount. But a marriage means your partner wants the company to keep growing. They won’t bring in bad assets just to offload them. If you plan to live together for the long term, you choose marriage.”

5 leading AMCs driving Thailand’s bad-debt recovery

Kritsanaphong Kitsanapitak, Senior Executive Vice President of SAM, underlined SAM’s mission to act as a “debt rehabilitation mechanism”, helping clients return to financial health before resorting to asset liquidation. Over 25 years, SAM has channelled 260 billion baht back to the Financial Institutions Development Fund (FIDF) and managed debt restructuring and rehabilitation for thousands of debtors, including through its Debt Clinic project, which has helped over 106,000 borrowers with a combined debt value of 22.5 billion baht.

Sutthirak Trichira-aporn, CEO of JMT Network Services Plc, described JMT as a “hybrid engine” within Thailand’s financial ecosystem, managing both secured and unsecured NPLs. JMT currently oversees over 500 billion baht in distressed assets, playing a critical role in restoring liquidity to the financial system.

Suksan Yasasin, CEO of Chayo Group Plc (CHAYO), highlighted that household debts below 100,000 baht now total over 1 trillion baht, spread across 37–38 million accounts, a segment he urged the government to prioritise, given its widespread impact on household stability and national economic recovery.

Tawee Kullertprasert, CEO of Knight Club Capital Holding Plc (KCC), who has worked in debt management since the 1997 crisis, reiterated that sustainable debt restructuring must follow a “win-win solution” approach, balancing creditor recovery with debtor rehabilitation.