New loans contract sharply amid BOT’s responsible lending policy


But NPLs continue to rise across most loan types

Tightening of loan criteria in response to the Bank of Thailand (BOT)’s responsible lending policy has resulted in large contractions in new loans in the first four months of this year, says the National Credit Bureau (NCB).

Introduced in January to combat soaring household debt, the responsible lending policy aims to curb non-performing loans (NPLs) mainly by restructuring debts before and after they go bad. It also protects borrowers by prohibiting banks from penalising customers for paying off debts early, and helps those in vulnerable groups by turning their overdue debts into instalment loans.

Figures for April show commercial banks granted the least new loans at 8,927 contracts, 23.8% down from the previous month. State-run banks approved 11,032 new loans, a huge drop from the 23,012 contracts recorded during the peak period last year.

The trend persists across most types of borrowing: Auto loans approved in April fell to 50,351 contracts, down 12.5% from the previous month; credit card loans dropped 23.6% to 93,212; and non-bank loans fell 2.15% to 86,528.

However, the amount of NPLs is still rising across most loans despite the responsible lending policy. 

In April, NPLs rose to 86.73 billion baht for housing loans (6.55%), 163.7 billion baht for auto loans (2.7%), 24.42 billion baht for bank loans (7.67%), and 73.62 billion baht for personal loans (9.62%).

The central bank’s policy has however benefited those plagued with debts. A total of 820,000 borrowers entered the debt restructuring programme, with combined debt of 230 billion baht, in the first four months of the year, according to the BOT.