The number of applicants for the debt clinic’s unsecured loan restructuring program has recently increased 2-3 times to about 200,000 due to the impact of the Omicron variant.
The clinic was launched by the Bank of Thailand and is managed by Sukhumvit Asset Management Company (SAM).
There are about 80,000 unsecured loan accounts with total outstanding loans of about 6 billion baht restructuring their debt to the clinic.
The central bank has repeatedly adjusted debt clinic criteria to provide broader opportunities for individual borrowers suffering from the protracted pandemic.
The Bank of Thailand recently allowed credit cards and personal loans classified as non-performing loans (NPLs) before April 1, 2022 to enter the debt restructuring program.
Previously, only PNPs on credit cards and personal loans before October 1, 2021 were allowed to participate in the program.
The easing occurred because more borrowers were affected by the spread of Omicron, said Suwathana Rusmeerojwong, SAM’s senior vice president for unsecured loan management services department, who is an executive for the Debt Clinic project.
After many central bank criteria were relaxed, more individual borrowers could enter the debt restructuring program, she said.
Ms Suwathana said the central bank, SAM and other related parties have been discussing relaxing additional criteria for the debt clinic to help more borrowers ease their debt burden.
This easing would cover several areas, aimed at helping the country reduce swelling household debt, she said.
The Bank of Thailand is concerned about the high level of household debt, which now stands at 90.1% of GDP.
Even though the debt-to-equity ratio briefly declined from 90.6% in the first quarter of last year, the ratio is quite high and affects borrowers’ ability to repay debt, especially during the protracted pandemic, said Suwannee Jatsadasak, senior director, on the central bank’s Facebook Live. Last week.
Thailand’s high household debt ratio is the result of both the country’s economic slowdown and rising household debt, especially during the pandemic.
During the pre-pandemic period, the household debt ratio was stable at around 80%.
Ms Suwannee said the central bank was mainly concerned about unsecured consumer loans, which account for 28% of total household debt.
South Korea also has a high household debt ratio, but the country’s per capita income is higher than in Thailand. Much of South Korea’s household debt comes from secured loans.
Thailand’s secured lending products account for 72% of total household debt and the largest portion, at 35%, comes from mortgages, followed by business loans at 18%.