Thai Government Proposes THB20 Billion Bailout to Tackle Small-Scale Household Debt
Finance Minister to seek approval on Monday for state-backed AMC to purchase non-performing loans (NPLs) under 100,000 baht from banks and lenders
- The Thai government has proposed a 20 billion baht bailout fund to purchase small-scale non-performing household loans (NPLs) valued at less than 100,000 baht.
- The state-owned Sukhumvit Asset Management (SAM) will manage the purchased debt, restructuring it to offer debtors extended repayment periods and reduced interest rates.
- The initiative introduces a new "Ari Score" to assess a debtor's financial discipline, with good adherence potentially leading to further interest rate reductions.
- To qualify for the program, debtors must consent to the full disclosure of their financial information to allow for an accurate assessment of their repayment capacity.
Finance Minister to seek approval on Monday for state-backed AMC to purchase non-performing loans (NPLs) under 100,000 baht from banks and lenders.
The Thai government is set to take a decisive step in tackling the nation's severe household debt crisis, with a proposal to use a 20 billion baht state fund to buy up small-scale non-performing loans (NPLs).
Deputy Prime Minister and Finance Minister Ekniti Nitithanprapas confirmed that the Ministry of Finance will present the debt resolution scheme to the Economic Cabinet on Monday, 3 November, before seeking final approval from the main Cabinet.
The funds, drawn from the remaining balance of the Financial Institutions Development Fund (FIDF), will be used to purchase NPLs that are valued at less than 100,000 baht from both commercial banks and non-bank financial institutions (non-banks).
To expedite the relief process, the debt will be channelled through the existing state-owned Sukhumvit Asset Management (SAM) rather than establishing a new Asset Management Company (AMC).
This mechanism will allow SAM to restructure the loans, offering debtors extended repayment periods and reduced principal and interest rates based on their financial capacity.
Ekniti highlighted that the initiative is paired with new measures to ensure sustainable financial recovery, including the implementation of Information Based Lending in partnership with the National Credit Bureau (NCB).
A key tool in this push is the introduction of the Ari Score, a mechanism designed to assess a debtor’s financial discipline.
Those who consistently demonstrate adherence to financial discipline could benefit from continuous interest rate reductions.
To facilitate accurate debt restructuring, the proposal requires debtors to consent to the full disclosure of their financial information, including expenses such as water and electricity bills.
This visibility allows banks to properly assess the debtor’s true financial status.
The minister emphasised that the measures are designed to give debtors much-needed "financial breathing room," reducing aggressive debt collection practices and incentivising a return to sound financial habits.
The long-term goal, supported by potential supplementary funding from the Government Savings Bank (GSB), is a sustained recovery for household debtors across the country.
