BANGKOK, 1 May 2019(NNT)-A study by the Bank of Thailand (BOT) has found that overall Thai household debt is still high. Government agencies are advised to maintain a policy to strictly supervise financial institutions’ lending, and provide information and an understanding of financial planning to people.
Mrs. Soamrasat Chantharat, Head of Research Group, Puey Ungphakorn Economic Research Institute, BOT, disclosed today that the study of Thai household debt using the credit bureau’s information on loan arrangements for the nine years from 2009-2018, showed that the proportion of household debt owed to large commercial banks and state-owned specialized financial institutions, had continually declined, in contrast to the increase in the growth of debt owed to medium-sized commercial banks and non-financial institutional service providers or nonbanks.
Most loan applications were submitted by existing borrowers. Only one-fifth of loans were granted to new borrowers. Most of them were car loans, home loans, motorcycle loans and personal loans.
Existing borrowers were found to have increased the amounts of new loans, with multiple accounts with many financial institutions, especially unsecured loans which often have a deteriorated credit quality, with the number growing constantly, together with a concentration of debts and some types of non-performing loans in the market which is highly competitive, such as housing loans and personal loans in Bangkok and its vicinity and large city areas.
A study found that Thai household debt had an apparent faster growth rate than the country’s economic growth in 2018, with the household debt ratio at 78.6 percent, which is among the top three countries with the highest household debt in Asia. This directly affects overall economic expansion.
The government sector works continually to resolve the household debt problem by promoting financial knowledge, issuing measures to regulate credit card and personal loans under the supervision of the BOT, and establish debt relief clinics for people to study and truly understand the major causes of debt from spending more money than they earn, especially non-essential spending, purchasing goods beyond their financial level, and a lack of an appropriate long-term financial plan.