Banks seek agreement on duplicate credit collection
COMMERCIAL BANKS are aiming for an agreement early next year to reduce duplicate credit collection by centralising the collection of unsecured loans from borrowers with debts in multiple financial institutions, Thai Bankers’ Association (TBA) chairman Predee Daochai said.
TBA has agreed with the Bank of Thailand over how to reduce |the duplicate credit collection, he said.
Each bank should have the same information on borrowers to manage debt collection and the agreement will help each bank know who is the primary creditor or secondary creditor.
“We must have a tool first to develop the debt collection. The tool might be an agency, of which the model will be designed by bank members who join the agreement. If this is successful, we may open non-banks to join with the banks,” he |said.
Having the debt collection mechanism in banking industry will lead to a lower non performing loan (NPL), he added.
Mechanism sought
Bank of Thailand governor Veerathai Santiprabhob said that BOT is also looking into a mechanism to help deal with unsecured loan management in banking industry.
Banks should have a mechanism to manage NPLs of unsecured loans apart from write down debt, he said. The model is not specific but the mechanism should increase the efficiency in managing debt from the current situation where the customer has to negotiate with each creditor.
If a bank hires an outside company to collect debt, it can be expensive, he said.
BOT has set up a working committee to study the mechanism, he said, and many countries have this type of mechanism to help manage debt collection.
He added that BOT will also pursue another mechanism to prevent customers from getting into more debt before they enter debt negotiations.
This mechanism will be based on the understanding that each bank has to offer products that relate to customer requirements.
