Bangkok: A comprehensive debt solution package is being prepared by a working group to present to the Prime Minister, aiming to tackle retail debt issues effectively. The package recommends abolishing flat interest rates and emphasizes the establishment of a national Asset Management Company (AMC) to rehabilitate debtors, rather than focusing on profit-driven debt trading.
According to Thai News Agency, Mr. Kittirat Na Ranong, former Deputy Prime Minister and advisor to the People’s Debt Resolution Committee, stated that the Prime Minister had formed 10 working groups to study measures for addressing various types of debt, including farmer, government official, student loan, credit card, and home loan debts. The forthcoming plan aims to address these systemic debt issues through legal amendments and other measures. Mr. Kittirat noted that civil servants in debt, who have faced bankruptcy, should receive assistance without having to leave their jobs, acknowledging that various approaches are available to support them.
A proposed amendment to the GH Bank law is part of the plan, allowing long-term borrowers with minimal remaining principal to apply for additional loans using their homes as collateral. This would help them manage high-interest debts more flexibly. Given that GH Bank handles nearly half of the home loans in the system, this amendment is expected to provide a significant debt management avenue. The Bank of Thailand has expressed support for this amendment.
The Ministry of Finance and the Bank of Thailand are implementing the “You Fight, We Help” initiative, which aims to broaden debtor coverage. Credit card companies are encouraged to adopt government-style debt management strategies, offering reduced-principal and reduced-interest installment plans. Furthermore, banks and non-banks are proposed to abolish flat-rate interest rates, ensuring fairer interest rates for debtors. This initiative targets small businesses struggling with repayments due to economic challenges and poor agricultural yields.
For farmer debt, the working group has proposed several approaches to mitigate issues caused by uncontrollable factors, such as currency fluctuations and natural disasters. With 8 million farming households in Thailand, 4 million of whom are rice farmers, sustainable strategies to increase yields are crucial. Various measures are being explored to address these challenges and support farmers effectively.
The establishment of a national AMC is also proposed to manage Non-Performing Loans (NPLs) from retail customers. This modern AMC would focus on debtor rehabilitation rather than profit, employing various measures to drive the process forward. Establishing this AMC is seen as a concrete step towards managing the debt problem comprehensively.