focuses on reducing the burden of smaller debtors
PUBLISHED: 24 Mar 2025 at 06: 35
To ease the financial burdens on small-scale debtors, the government has announced plans to purchase non-performing loans ( NPLs ) with outstanding balances below 100, 000 baht.
Pichai Chunhavajira, the deputy prime minister and financing minister, claimed that the government prioritizes small-scale debt reduction because the financial crisis is primarily affecting lower-income groups. The program aims to assist 3.5 million people who are battling a 120 billion baht total bill.
” Financement will be sourced from the Financial Institutions Development Fund ( FIDF) rather than the national budget.” The government plans to restructure these NPLs to give them more manageable payment alternatives, he said, and then buy them from banks for only 1 % of their value.
Because businesses have already deducted these payments from taxable earnings at a 20 % tax price,” the plan to buy NPLs is possible.” Cleaning these defaulted loans may also aid lenders in rewriting their financial statements. Some NPLs have reportedly been sold in past transactions for less than 1 %, according to the minister.
Due to the fact that this category accounts for the majority of lenders and can be helped for a relatively low cost, the decision was made to concentrate on obligations under 100, 000 baht.
These debts, which have been late for more than a year, are primarily unsecured loans or customer debts. With a total debt of 120 billion baht, or about 10 % of all NPLs, this sector has a total of 3.5 million people, or 65 % of all NPL holders.
According to him, “effectively addressing these debts may lower casual financing, lower house loan rates, and enhance consumer purchasing power, finally assisting financial recovery.”
The secretary claimed that the government will only be spending a small sum on this program. The” You Battle, We Help” debt relief program, which was funded by the FIDF and still has between 20 and 30 billion baht available annually, will receive funding from the unused funds of the program.
Before beginning the payments, Mr. Pichai stated that debate with monetary institutions will take place. If successful, a specialized debt management company, either an existing one or a previously established one, will manage the acquired bills.
” The main objective is to ensure the government does not income by allowing lenders to recover at cost price, with only administrative costs added,” said Mr. Pichai.
However, the National Credit Bureau (NCB) won’t quickly replace lenders from their records until they are paid off in full. The state is looking into ways to make them disappear more quickly while also offering other credit options.
Financial assistance from online banks and private lenders that don’t rely on NCB checks might be offered by the Government Savings Bank, which may also offer loans in the range of 10,000 to 120,000 baht. Although interest rates may be a little higher than those for traditional money, they still are considerably lower than those for casual loans, which can yield up to 100 % interest.
Mr. Pichai expressed concern that the government’s plan to buy more debt may promote reckless borrowing. He claimed that the program was created to aid those who can boost the economy.