BOT back down on DSR policy

[webfact]

BOT back down on DSR policy

By The Nation

 

 

Central bank backs down on DSR policy

 

The Bank of Thailand (BOT) has decided to indefinitely postpone the use of debt-service ratio (DSR) as a loan criteria, though it is still calling on commercial banks to embrace a responsible lending policy.

 

Ronadol Numnonda, deputy governor of BOT’s Financial Institutions Stability, said the central bank has decided to not implement the DSR policy at the end of the year as originally planned.

 

“However, the BOT has already told banks and financial institutions to set a standard for DSR calculation based on borrowers’ debts and income, which should be ready by the fourth quarter.

 

“BOT also wants financial institutions to employ responsible lending principles, with an emphasis on making sure that borrowers still have enough money left for daily life after paying their debts,” Ronadol added.

 

Meanwhile, Chanin Wanichwong, CEO of Habitat Group, said the delay in the DSR policy is good news for property developers. “This year’s property market is rather slow, and the implementation of DSR would have reduced the number of clients further. We are hoping that besides indefinitely postponing the DSR, the government will provide additional measures to help the property business, such as reducing property transfer tax.”

 

Additionally, Finance Minister Uttama Savanayana said his ministry had nothing to do with BOT’s decision to postpone the use of DSR. “I believe that Bank of Thailand must have studied the possibility and consequences of this policy before deciding to postpone it, and I trust their judgment,” he said.

 

“The ministry has never issued an order to halt the implementation of DSR.”

 

Source: https://www.nationthailand.com/news/30375586

 

-- © Copyright The Nation Thailand 2019-08-30

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[RichardColeman]

So, full steam ahead to lend money against nothing , build things nobody want and create more debt. More bubble fuel.

[Pib]

Guess the Thai Bankers Association pushed back on the BOT proposed DSR policy. 

[Srikcir]

More personal debt holds down overcoming income inequality.

That's a good policy from the viewpoint of an elitist regime wanting to preserve its political power through wealth.

[Srikcir]

12 hours ago, webfact said:

The Bank of Thailand (BOT) has decided to indefinitely postpone the use of debt-service ratio (DSR) as a loan criteria

Generally, lenders frown on a negative cash flow, but some allow it if the borrower has strong outside income. Typically, most commercial banks require the ratio of 1.15–1.35 times (net operating income or NOI / annual debt service) to ensure cash flow sufficient to cover loan payments is available on an ongoing basis. https://en.wikipedia.org/wiki/Debt_service_coverage_ratio

Apparently not a fiscal policy that BOT practices.

KEEP THE BAHT STRONG!