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Two Emergency Loan Decrees Issued For Debt
Published: 12 апреля, 2021 at 1:41 пп
These decrees are mean to provide financial aid to ailing businesses.
The government has issued two emergency loan decrees. These decrees are meant to provide assistance to ailing entrepreneurs who continue to be unable to pay off existing debt. Both of these declarations are effective today, Monday.
According to the Bangkok Post, one of these decrees issues THB350 billion worth of financial assistance to businesses affected by the current pandemic. The other one forcibly reduces the interest rate charged on existing loans.
Through these decrees, government deputy spokesperson Rachada Dhnadirek said that the government hopes the burden of debt-ridden entrepreneurs can be eased amidst the continuing pandemic. In addition, they would be protected from unrealistic interest rates slapped onto their existing loans.
Both of these decrees have been published yesterday in the Royal Gazette, which makes them official government policy moving forward.
With the government intervening on behalf of entrepreneurs with regards to interest rates, businessmen can be protected from creditors aiming to take advantage of a loophole in existing legislation governing debt repayment.
The previous law did not specify how much interest creditors can charge in case borrowers default on an existing loan. This allowed creditors free rein in charging these rates on top of the principal amount owed.
The law, which existed since 1925, has been deemed irrelevant by the government in light of the current economic situation.
With the first emergency decree, Ms. Rachada said, creditors can now only charge a ceiling of 3% per annum. For debts on default, debt issuers can now only charge a rate of 5% per annum. This is a reduction from the previous default rate of 7.5%.
In addition, she said that the Finance Ministry will be revising interest rates every three years.
As for the second emergency decree, it allows debt-ridden entrepreneurs to procure aid via a THB250 billion loan package. This loan package is intended specifically for businesses affected by the current pandemic.
An additional THB100 billion has been set aside for asset warehousing and debt repurchasing, Ms. Rachada added.
These decrees have been deemed crucial by the government in extending aid to businesses affected by the current pandemic, the government spokesperson added.
Asset warehousing is a new scheme formulated by the Finance Ministry to aid ailing entrepreneurs whose financial standing has been severely affected by the COVID-19. This scheme allows businesses with working assets to “park” these with their debt issuers while they have not repaid their debt.
They can then repurchase these assets at a pre-determined price once they have regained their financial standing. They can also make use of the assets while still in debt by paying a fixed rate for lease of these properties every year.
Reports indicated earlier that tourism-related businesses, especially hotels, are interested in taking advantage of the asset warehousing scheme.
These emergency decrees follow in the wake of earlier discussions by the Bank of Thailand and the Ministry of Finance regarding measures and law revisions to provide aid for financially burdened businesses particularly in the tourism sector.