BoT urges banks to ease debt and extend fresh loans

The Bank of Thailand has asked financial institutions to step up support for borrowers affected by the economic slowdown, urging them to ease repayment terms on existing debt and provide fresh funding to help sustain liquidity and business activity.

The central bank said it had requested cooperation from commercial banks, specialised financial institutions and businesses under its supervision to assist debtors through a combination of new credit and more flexible repayment conditions tailored to each borrower’s needs.

It said lenders should look beyond a borrower’s current cash flow or immediate financial position when assessing support, noting that those conditions may not reflect the borrower’s normal long-term repayment ability in the current environment.

For existing loans, the Bank of Thailand said lenders should adopt preventive or pre-emptive measures as soon as there are signs that a borrower may face repayment difficulties. The aim is to reduce instalment burdens in line with each borrower’s circumstances.

Possible relief measures include allowing borrowers to pay interest only, cutting instalments, reducing interest rates and applying repayments to principal before interest. The central bank said such support should apply across all loan categories, including hire-purchase and leasing for cars and motorcycles, car-title loans and supervised personal loans.

Lenders were also asked to clearly explain the terms of any support measures to borrowers and guarantors, if any, and ensure both parties understand the consequences of joining the scheme.

For new lending, the Bank of Thailand said financial institutions, specialised financial institutions and supervised businesses should consider extending fresh credit to improve liquidity and strengthen borrowers’ ability to continue operating. This includes funding for investment in energy-saving measures.

Commercial banks can also make use of the SMEs Credit Boost programme, which is designed to reduce lending risks when extending credit to business clients.

In addition, banks and specialised financial institutions may consider providing extra loans to SMEs with collateral under the “SMEs Secure+” framework. The scheme offers temporary flexibility in assessing debt-servicing ability, allowing lenders to weigh collateral value alongside the borrower’s cash flow.

The Bank of Thailand said it would continue to monitor the situation closely and assess the impact on the economy and the financial system from all angles, so that policies and support measures can be adjusted appropriately.

It said the goal is to ease pressure on households and businesses, particularly SMEs, so they can keep operating and adapt to rapidly changing conditions.