BOT backs down on DSR policy

The Bank of Thailand (BOT) has decided to indefinitely postpone the use of debt-service ratio (DSR) as a loan criteria, though it is still calling on commercial banks to embrace a responsible lending policy.
Ronadol Numnonda, deputy governor of BOT’s Financial Institutions Stability, said the central bank has decided to not implement the DSR policy at the end of the year as originally planned.
“However, the BOT has already told banks and financial institutions to set a standard for DSR calculation based on borrowers’ debts and income, which should be ready by the fourth quarter.
“BOT also wants financial institutions to employ responsible lending principles, with an emphasis on making sure that borrowers still have enough money left for daily life after paying their debts,” Ronadol added.
Meanwhile, Chanin Wanichwong, CEO of Habitat Group, said the delay in the DSR policy is good news for property developers. “This year’s property market is rather slow, and the implementation of DSR would have reduced the number of clients further. We are hoping that besides indefinitely postponing the DSR, the government will provide additional measures to help the property business, such as reducing property transfer tax.”
Additionally, Finance Minister Uttama Savanayana said his ministry had nothing to do with BOT’s decision to postpone the use of DSR. “I believe that Bank of Thailand must have studied the possibility and consequences of this policy before deciding to postpone it, and I trust their judgment,” he said. “The ministry has never issued an order to halt the implementation of DSR.”