PM’s new interest calculation method ‘a move to help free people from debt’
A new initiative by Prime Minister Prayut Chan-o-cha to reform interest calculation would help people free themselves from debt faster, deputy government spokesperson Tipanan Sirichana said on Wednesday.
She said the move aims to tackle the serious debt problem faced by many people and entrepreneurs across the country in a sustainable manner, maintain fairness and meet the changing needs of the economy.
"The premier's move is historic as it has changed a method of interest calculation in Thailand used for more than 95 years ago," she said.
Explaining the PM’s interest calculation reform, she said:
● People must pay only 3% from 7.5% per year for interest which is not included in the agreement, while the Finance Ministry must review such interest every three years to conform to commercial banks' average between deposit rate and lending rate.
● People must pay only 5% of 7.5% per year as default interest -- 3% under Section 7 of Civil and Commercial Code plus an additional 2%.
● Creditors must calculate the default interest based on when debtors make the payment instead of the debtors' whole principal.
She added that the premier's interest calculation reform would also help ensure fairness in other types of debt repayment, such as hire purchase of vehicles.
"Prayut's move to amend outdated laws proves his intention to maintain fairness in society, while people do not have to suffer from high interest anymore," she said.