BoT sends circular letter to financial institutions Prepare to enforce criteria for responsible and fair lending, or Responsible Lendling, covering 8 important areas, hoping to curb household debt and reduce debt-incurring behavior. D-Day comes into effect on January 1, 2024.
On December 31, 2023, reporters reported that The Bank of Thailand (BoT) has sent a circular to all financial institutions under supervision. Regarding responsible and fair lending (Responsible Lendling), the aforementioned criteria will be effective from January 1, 2024 onwards.
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The reason for issuing the announcement Providing responsible and fair lending (Responsible Lendling) because Thai household debt is a structural problem that has accumulated for a long time and has continued to increase sequentially from 76% of GDP in 2012 to 84% of GDP in Year 2019 and was aggravated
Intensified during COVID-19 at 95% to GDP in 2021
Although the ratio of household debt to GDP will begin to gradually decrease to 91% in the second quarter of 2023 following the recovering economy and expanding credit. Slowing down after the end of assistance measures But this proportion is still high. The Bank of Thailand recognizes the importance of the household debt problem as a structural problem of the country that must be resolved in order to control the level of household debt so that it does not affect the stability of the financial system and the long-term expansion of the economy.
Solving household debt problems takes time and must be done in a comprehensive manner appropriate to the nature and causes of problems in each period of debt. And do it in a correct manner, that is, fix it to the point without creating additional burdens for the debtor. and does not reduce the opportunity to access credit All sectors must cooperate, including creditors, debtors, and the government sector.
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Therefore, the Bank of Thailand has issued guidelines for responsible and fair lending.
(Responsible Lending) to enhance compliance with the circular regarding management guidelines
Fair credit granting To be more comprehensive and clear. It is used as an additional criterion from the announcement of the Bank of Thailand regarding fair management of services to customers (Market Conduct).
By specifying the role and duty of service providers in being responsible for customers throughout the debt cycle appropriately. From developing and advertising loan products Providing quality new loans, taking care of existing debts, especially chronic debts and bad debts. Until legal action and debt transfer Including promoting the provision of information to nudge customer behavior throughout the debt cycle and promoting financial discipline. So that people are in debt only as necessary and can afford to repay it.
This will be an important part in resolving the household debt problem sustainably in the long term. Including promoting service providers to manage service provision responsibly and fairly. This will be an important factor that will support service providers to operate their businesses sustainably.
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As for the criteria for granting loans in a responsible and fair manner (Responsible Lending), these are additional criteria from the announcement of the Bank of Thailand regarding fair management of services to customers (Market Conduct), consisting of criteria for credit granting management. Throughout the debt cycle, covering 8 areas as follows:
1. Development of loan products
2. Advertising
3. Sales process
4. Consideration of debt repayment ability (affordability)
5. Promoting discipline and financial management during periods of debt.
6. Providing assistance to debtors with chronic debt problems.
(Persistent Debt)
7. Providing assistance to debtors who have debt repayment problems. Both debt restructuring of non-performing debtors (non-NPL, which is a pre-emptive DR) and troubled debt restructuring (TDR).
8. Legal proceedings and debt transfer
to other creditors
The BoT D-Day 1 Jan. 2024 issued strict bank control criteria in 8 areas, hoping to curb household debt. The BoT D-Day 1 Jan. 2024 issued strict bank control criteria in 8 areas, hoping to curb household debt.
2023-12-31 21:36:52
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