BANGKOK: Thailand’s central bank has cleared debt consolidation at all financial institutions to help retail debtors pay lower interest rates, an official said on Monday, as policymakers try to mitigate the impact of coronavirus outbreaks.
Debtors can combine their unsecured debt with home loans from different banks, rather than the same lenders as before, Suwannee Jatsadasak, senior manager of the Bank of Thailand (BOT), told a press conference. .
Banks are allowed to charge interest rates on these unsecured consolidated loans, such as credit cards and personal loans, not exceeding mortgage rates plus 2% per annum, a total of around 8% currently. , she said.
This compares to interest rates on credit cards and personal loans of 16% and 25% per annum, respectively.
Banks are not allowed to charge prepayment fees until the end of 2023, Suwannee said.
The central bank has relaxed rules on banks’ debt classification, reserve requirements and capital levels to reduce costs for lenders contributing to the debt consolidation program by the end of 2023, a she added.
Debt consolidation is one of a series of financial measures designed to help debtors and businesses.
“The measures implemented by the BOT will allow financial institutions to continue to operate and banks to lend,” said Suwannee.
In the third quarter, global bank lending increased 5.6% year-on-year, compared with 3.7% in the previous quarter, as demand from businesses increased in line with the economic recovery.
(Reporting by Orathai Sriring and Kitiphong Thaichareon; editing by Martin Petty)