Interest break on 1.31 trillion baht arrears

The Finance Ministry has revealed details of the government’s plan to suspend interest payments for three groups of debtors as part of measures to ease household debt.

On Tuesday, the economic recovery committee chaired by Prime Minister Paetongtarn Shinawatra approved the plan for borrowers with debts of up to one year overdue.

The three-year interest suspension program will cover overdue home loans of no more than 3 million baht, car loans of no more than 800,000 baht and small and medium business loans of up to 3 million baht, a said Paopoom Rojanasakul, Deputy Minister of Finance. .

Of debts totaling 1.31 trillion baht, property borrowers owe 480 billion baht, car borrowers 370 billion baht and SMEs 454 billion baht, Mr Paopoom said.

“The government has decided to suspend the repayment of interest to debtors because we believe that they will be able to clear their debts and get back on their feet quickly if they receive assistance from the government,” he said. he declared.

To compensate for the reduction in bank interest rates following this measure, the Ministry of Finance will allow banks to reduce their contribution to the costs of the Financial Institutions Development Fund (FIDF) to 0.23% of deposits, compared to 0. 46% currently. » said Mr. Paopoom.

The Thai Bankers Association (TBA) has confirmed that the interest holiday program will be financed by reducing FIDF fees for banks.

To avoid moral hazard and guarantee an effective reduction in household debt, borrowers benefiting from the suspension must adhere to a debt restructuring plan and refrain from taking out new loans over three years.

Based on debt data as of October 31, eligible borrowers must have signed their loan contracts with banks before January 1 this year and must be facing difficulty repaying their loans.

The initiative is designed to help targeted borrowers reduce their debt burden and encourage financial discipline throughout the restructuring period, the TBA said. In June, Thailand’s household-to-GDP ratio was 89.6% and household debt stood at 16.3 trillion baht, among the highest levels in Asia.

Separately, Deputy Finance Minister Julapun Amornvivat said on Wednesday that the state welfare committee would meet on Thursday to review the eligibility criteria for state welfare cards.

New registrations will open in March next year for those who wish to apply, Mr Julapun said.

The Department of Finance says the data needs to be reprocessed to determine the qualifications of vulnerable groups, because some people may have earned enough to leave a vulnerable category, losing their eligibility for benefits.

The ministry has established a policy of reviewing the eligibility of social protection card holders every two years. The last review took place in 2022 and the next one was scheduled to begin this year.

However, efforts to deal with the flooding crisis in parts of the country have postponed the further revision of records until early 2025.

The main criterion for qualifying for the state social assistance card is that the annual income of a person and their family does not exceed 100,000 baht. This figure is calculated based on a minimum wage of 300 baht per day. In the last round of state social card registration in 2022, the number of eligible beneficiaries was 13.5 million, compared to 14.9 million in the previous round.