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.
1 The Pathumwan intersection and its skywalk is void of traffic and people during the lockdown hours in the capital. Pattarapong Chatpattarasill
The Bank of Thailand is allowing a two-month debt holiday for individuals and small and medium-sized enterprises (SMEs) suffering a direct impact from the government s latest lockdown measures to combat the pandemic.
The measure, which includes the cooperation of the Thai Bankers Association and the Association of International Banks, targets employees and employers in 10 provinces who have temporarily closed businesses as a result of the tighter lockdown measures.
This measure starts with monthly debt payments for July.
Borrowers who want to apply for this debt suspension measure can contact creditors from July 19.