BOT governor warns of low-growth economy, introduces targeted measures

Thailand's economy is currently stuck in a low-growth cycle. If structural problems are not addressed, the country will continue to face the same issues for many more years, said Vitai Ratanakorn, Governor of the Bank of Thailand (BOT).

During the “Thailand Economic Drives 2026” seminar hosted by Post Today on Tuesday (February 24), Vitai explained that the root causes of this stagnation stem from high household debt, which accounts for 86-87% of GDP, and the rising concerns surrounding the quality of non-performing loans (NPLs), which have been increasing steadily. 

Moreover, SME loans have been in the negative for 14 consecutive quarters.

However, Thailand still benefits from positive factors such as Foreign Direct Investment (FDI), which reached 1.8 trillion baht in applications for modern industry, and tourism, which remains a pillar of support for the economy. While tourist numbers have not yet returned to pre-pandemic levels, the value of tourism is still strong.

BOT moves forward with 'targeted measures'

Vitai stressed that using interest rates as the only tool cannot solve the productivity problems or enhance the country’s competitiveness. Hence, BOT has taken a more proactive role, implementing “targeted measures” alongside monetary policy.

Over the past four months, BOT has been driving and preparing four main initiatives, one of which is addressing the issue of bad debt through a "national asset management company (AMC)" mechanism.

Solving NPL debt issues

Vitai further explained that BOT has transferred NPL assets valued at under 100,000 baht from commercial banks—approximately 1.1 million accounts—to Sukhumvit Asset Management (SAM), acting as a “national AMC.” 

The new project approach focuses on “helping people, not profit,” offering individuals with lower debt loads the opportunity to re-enter the economy sustainably.

Progress on this initiative includes the transfer of assets completed on January 1, with debt tracking and management system phase one finished by early February. Currently, the project is inviting debtors to participate, with a two-year operational timeline. 

It is expected that 30-50% of the accounts, or around 300,000-500,000 people, could benefit from this programme.

Vitai highlighted that this project is just the beginning, with more measures to follow through cooperation between the central bank, the Ministry of Finance, commercial banks, and other relevant agencies to systematically tackle household debt.

Tightening gold transactions

In addition, BOT has started regulating gold trading through applications, marking a first for the central bank. These transactions directly impact the value of the baht. 

For instance, during times of rising gold prices, people sell gold through apps, causing gold shops to receive dollars. When these gold shops exchange the dollars for baht in large quantities, the baht’s value can appreciate quickly.

As a result, transactions exceeding 20 million baht per day must be reported to BOT, with a daily trading limit of 50 million baht per account. Exceeding this limit requires special permission, and there may be future consideration to reduce the limit to 20 million baht.

Furthermore, banks have been instructed to report all gold holdings within their apps, allowing BOT to see complete individual gold stock data. If more than two kilograms of gold are withdrawn, additional reporting is required to prevent using gold for hiding money.

Cash withdrawals exceeding 5 million baht must be justified

Vitai also shared that BOT is preparing to implement guidelines for cash withdrawals exceeding 5 million baht. This measure requires financial institutions to inquire about the purpose of such large transactions to deter undesirable activity and reduce the potential for crime.

However, the BOT assured that SME operators and individuals who need cash for regular business operations will still be able to make withdrawals by providing a valid reason. 

In the future, this could extend to deposits and the withdrawal limit might be reduced from 5 million baht to 3 million baht based on future evaluations.

Regulating bank fees

Alongside cash measures, BOT is also working with financial institutions to standardise around 10-15 bank fees to ensure they are aligned with actual costs. 

The first target is basic transaction fees such as transfers, withdrawals across regions, and ATM card fees, as well as fees for SMEs, including front-end credit management fees and prepayment penalties.

The updated fee guidelines, which are expected to be finalised within the next two months, will aim to ensure fairness and neutrality.

In the long term, Vitai stressed that economic stability must go hand-in-hand with economic growth. The goal is to raise the country’s potential GDP from its current 2.7% back to 3.5% or even 4% through structural reforms, new investments, and improvements in labour productivity.