Deputy Bank of Thailand Governor Ronadol Numnonda
A ceiling rate cut for consumer loans would not be a holistic solution to help ease the debt burden of individual borrowers, says an executive of the Bank of Thailand.
The central bank has been studying cutting the ceiling rate for some consumer loan products to lower the financial cost for retail borrowers. The bank needs to consider the pros and cons of the option, said deputy governor for financial institutions stability Ronadol Numnonda.
Even though a ceiling rate cut would reduce borrowers' costs, it might push some of them out of the financial system, he said. Lower interest rates will draw in more loan applicants, and some might be rejected if they do not have good repayment capacity. This could lead them to look for a loan shark, which often have unreasonable rates, said Mr Ronadol.