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Bank of Thailand Extends Debt Holiday to Performing Loans
Published: January 14, 2021 at 7:49 am
A slew of debt relief measures are available for commercial and retail borrowers.
As the second wave of the coronavirus rages on, the Bank of Thailand is pitching in with its own financial relief measures in order for individual creditors to cope up with their obligations without breaking the bank.
According to BoT’s deputy governor for financial institutions stability Ronadol Numnonda, creditors have until June this year in order to settle their debts according to their own terms. However, Mr. Ronadol said that the offer is extended only to retail and commercial borrowers with loans that are considered as “performing,” or loans that their borrowers are able to service despite the ongoing pandemic.
Retail borrowers can enjoy the benefits of the financial relief measures until June 30, 2021. Previous benefits have already expired on December 31, 2020.
Similar to previous financial relief measures, this new round of assistance for performing loans mean that financial institutions are required to provide financial assistance to borrowers to make sure they can keep up with their debts.
However, the actual assistance, which will be extended by commercial banks, specialized financial institutions and non-bank companies, will be rendered on a case-to-case basis.
Individual debtors can either apply for financial assistance on their own, or with the help of their employers in the case of welfare loans.
In the case of welfare loans, debts must provide consent for their employers to apply for the assistance before they can benefit from it.
On the other hand, credit cards and personal loans can be extended to 48 months, depending on the borrower’s individual case. The BoT requires that interest rates be capped at 12% and 22% for credit cards and personal loans, respectively.
In addition, amortizations for revolving loans and car title loans can also be reduced by 30% per month. Interest rate for this type of loan is also capped at 22% per annum.
Mr. Ronadol added that financial institutions are authorized in this financial relief measure to defer debt repayment for vehicle hire-purchase loans for three months. This covers both the principal amount and the recurring interest for the loans.
Alternatively, creditors can also offer to reduce the monthly amortizations for these loans by debt rescheduling.
In addition, credit line regulation for hire-purchase loans have been voided by the Bank of Thailand. A maximum of THB35,000 for motorcycles and THB250,000 for cars has been set for this.
As for mortgages, borrowers can now defer principal and interest payments for up to three months. Alternatively, creditors can also reduce interest repayments in addition to deferring payments but only after assessing the borrowers’ ability to continue paying for the loan.
Lastly, they can work on debt rescheduling in order to lower the monthly installments for mortgage payments for affected borrowers.
Small and medium enterprise owners can still take advantage of the existing debt relief measures from last year, which is set to expire on June 30. Applicants can take advantage of debt restructuring, additional credit lines and the relaxation of existing loan conditions.
SMEs with credit lines of at most THB100 million can also apply for deferment of debt repayment, the central bank said.