BANGKOK (Reuters) – Thailand’s central bank has allowed debt consolidation across all financial institutions to help retail debtors pay lower interest rates, an official said on Monday, as policymakers try to mitigate the impact of coronavirus outbreaks.
Debtors can combine their unsecured debt with home loans from different banks, rather than from the same lenders as before, Suwannee Jatsadasak, senior director of the Bank of Thailand (BOT), told a news conference. .
Banks are allowed to charge interest rates on these consolidated unsecured loans, such as credit cards and personal loans, not exceeding mortgage rates plus 2% per annum, or totaling about 8% currently, a- she declared.
This compares to interest rates on credit cards and personal loans of 16% and 25% per annum, respectively.
Banks are not allowed to collect prepayment fees until the end of 2023, Suwannee said.
The central bank has eased rules on bank debt classification, reserve requirements and capital levels to reduce costs for lenders contributing to the debt consolidation program by the end of 2023, it said. she added.
Debt consolidation is part of a series of financial measures aimed at helping debtors and businesses.
“The measures the BOT has put in place will allow financial institutions to continue to operate and banks to lend,” Suwannee said.
In the third quarter, total lending by banks rose 5.6% year-on-year, compared with a 3.7% increase in the previous quarter, as business demand increased in line with the economic recovery.
(Reporting by Orathai Sriring and Kitiphong Thaichareon; Editing by Martin Petty)