Banks told to cut interest rates and fee charges for small businesses, consumers

[webfact]

Banks told to cut interest rates and fee charges for small businesses, consumers

By The Nation

 

The Bank of Thailand (BOT) has ordered financial institutions to change the ways they calculate interest rates and fee charges to lessen the financial burden on small businesses and at the same time, reflecting real cost, says governor Veerathai Santiprabhob (right)on Tuesday.

 

The Bank of Thailand (BOT) has ordered financial institutions to change the ways they calculate interest rates and fee charges to lessen the financial burden on small businesses and at the same time, reflecting real cost, said governor Veerathai Santiprabhob on Tuesday (January 7).

 

The central bank has demanded banks to make change to prepayment fine whereas banks usually impose interest charge on the full loan amount extended to small and medium-sized enterprises(SMEs) and individual clients. Under new calculation method, interest charge must be based on the balance amount.

 

Banks are also required to set a grace period for prepayment’s interest rate charge. The new way of interest rate calculation is aimed at encouraging competition in debt refinancing market, said Veerathai.

 

Banks are also required to change the way they calculate interest charge for default on mortgages, SME loans, and personal loans. Currently banks impose interest rates on a balance amount.

 

New interest charge must be based on the installment amount as it will be lower. Banks should reduce interest rate or cancel interest rate on existing clients who are currently on loan default list.

 

Banks were also asked to offer a grace period on interest payment should a debtor fail to pay his debt on time due to genuine financial difficulties. This new way of debt restructuring will be fairer and reduce the affordability risk, according to the central bank.

 

In case of banks cancelling ATM or debit cards before the expiry date, banks have to pay back a proportional amount of the card fee to clients and when banks issue new cards to replace old ones, they can no longer impose fee charge. However, should the cost of issuing a new card is high, banks can charge clients accordingly, it said.

 

The central bank also asked banks to adopt four guidelines on interest rates and fee charges: The charges have to reflect real service cost. Banks should not impose excessive burden on clients and have to take into accounts their ability to pay. Banks must not demand duplicate fees from clients. Banks have to disclose list of fee charges to the public.

 

The central bank will make available each bank’s interest rates and fee charges to the public in order to encourage competition in the market.

 

The central bank assures the new measures would make people have more confidence in the financial system and support service providers to operate sustainably.

 

Source: https://www.nationthailand.com/business/30380252

 

-- © Copyright The Nation Thailand 2020-01-08

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[legend49]

Charges, yes. We learnt if you repay a loan early within 3 years of its start date there is a penalty, must pay the BOT 3% of the loan. Thats a reward for early repayment.

[tonray]

10 minutes ago, legend49 said:

Charges, yes. We learnt if you repay a loan early within 3 years of its start date there is a penalty, must pay the BOT 3% of the loan. Thats a reward for early repayment.

It's because banks are in the business of making loans for profit. When they make a loan, their projections for profit are that a certain amount of return is recieved for capital, when someone prepays that return is eliminated, reducing their ability to make loans to others. The administrative costs of issusing and servicing a loan then end up making the loan a break even or maybe even a loser if the prepayment happens in the first couple of years. 

[George Aylesham]

Any chance of the ATM fee for foreign credit/debit cards being cut then?

[TallGuyJohninBKK]

11 minutes ago, George Aylesham said:

Any chance of the ATM fee for foreign credit/debit cards being cut then?

 

It surely doesn't cost any given Thai bank 220 baht to handle a foreign debit card ATM withdrawal, when Thai bank card withdrawals are generally free.

 

But do I think they'll ever reduce the 220b fee that non-Thai cards get nicked for, BoT directive notwithstanding, NO....

 

[Pib]

4 hours ago, legend49 said:

Charges, yes. We learnt if you repay a loan early within 3 years of its start date there is a penalty, must pay the BOT 3% of the loan. Thats a reward for early repayment.

You paid the "Bank of Thailand (BOT)" a 3%  penalty!?

 

I don't think so because you did not have a loan from Thailand's national bank (i.e., BOT).  You had a loan from a commercial bank like K-Bank, SCB, Bangkok Bank, etc.

[Pib]

31 minutes ago, George Aylesham said:

Any chance of the ATM fee for foreign credit/debit cards being cut then?

Not going to happen as that's not impacting the Thais....Thais don't have/use foreign cards.  

 

The great, great, great majority of the foreign card fees (i.e., the Bt220 ATM) is coming out of the pockets of the 30+ million tourists which visit Thailand every year for a few days to a few weeks--you know, cash cows.

 

Typically tourists know during their holiday/vacation they are going to incur various high fees and rip-off prices---but they put up with it because "they are on vacation...a week or two of happy time....blowing your money....just something a person must put up with during a vacation to a foreign country."

[topt]

17 minutes ago, Pib said:

is coming out of the pockets of the 30+ million tourists

Off tangent but do you know what the Chinese tourists are using when they pay by phone at 7/11s. AliPay or something similar? Almost looks sometimes like the 7/11 staff scan their phone but I could be wrong.

[TallGuyJohninBKK]

25 minutes ago, Pib said:

Not going to happen as that's not impacting the Thais....Thais don't have/use foreign cards.  

 

The great, great, great majority of the foreign card fees (i.e., the Bt220 ATM) is coming out of the pockets of the 30+ million tourists which visit Thailand every year for a few days to a few weeks--you know, cash cows.

 

Typically tourists know during their holiday/vacation they are going to incur various high fees and rip-off prices---but they put up with it because "they are on vacation...a week or two of happy time....blowing your money....just something a person must put up with during a vacation to a foreign country."

 

I think your general point is correct, Pib. But I also think that the high Thai ATM fee has had an effect of pushing more visitors to use the cash money conversion businesses like Superrich, etc...

 

When I'm out and around BKK these days, I'm often passing various of their BTS station outlets and they often have LONG queues of tourists waiting there to change their money -- and that's something I never used to see to that same extent in past years.

 

Conversely, when I'm around Thai bank ATMs, I comparatively less often see foreigners/tourists using them anymore.  I think the 220b fee has had an effect on putting tourists off using Thai bank ATMs to some extent.

 

[Pib]

6 minutes ago, topt said:

Off tangent but do you know what the Chinese tourists are using when they pay by phone at 7/11s. AliPay or something similar? Almost looks sometimes like the 7/11 staff scan their phone but I could be wrong.

Nope....don't know.  So many ways to pay now days....and more ways continue to appear.  At some stores checkout counters it's beginning to look like some control center with various devices for different payment methods.

 

[TallGuyJohninBKK]

12 minutes ago, topt said:

Off tangent but do you know what the Chinese tourists are using when they pay by phone at 7/11s. AliPay or something similar? Almost looks sometimes like the 7/11 staff scan their phone but I could be wrong.

 

I don't know about the Chinese, but I do know most Thai 7/11's these days will accept either VISA or MC debit/credit cards for payment, as long as the purchase amount is 300b or more.

 

[Cake Monster]

I consider myself to be a " Consumer " as I live here, and spend my money here.

The other day, I was informed by my Bank that I had to change my ATM / Debit Card from a 4 Digit PIN to a 6 Digit Pin.

So off I trotted to the Bank to get this minor issue sorted out.

Cost to me for this " Service " from the Bank, a paltry 599 Baht !!!!

I asked if this was A Farang cost, and was told " No every Customer has to pay this Fee "

Next the Banks will charge an entrance fee to the Building.

 

 

[Pib]

29 minutes ago, Cake Monster said:

Next the Banks will charge an entrance fee to the Building.

Don't worry about an bank building entrance fee.  The way thinking are going in banking with more and more automation...fancy, whiz-bang machines and apps/ibanking that can do most tasks a human can do (to include saying no-can-do stupid farang) in another 10 to 20 years it might be hard to even find a bank building. 

[worgeordie]

Yes, they will do it out the kindness of their hearts,

regards Worgeordie

[tjo o tjim]

16 hours ago, tonray said:

It's because banks are in the business of making loans for profit. When they make a loan, their projections for profit are that a certain amount of return is recieved for capital, when someone prepays that return is eliminated, reducing their ability to make loans to others. The administrative costs of issusing and servicing a loan then end up making the loan a break even or maybe even a loser if the prepayment happens in the first couple of years. 

In addition, if the loan has been bundled into a bond there is a likely fee for early call.  For individual cases it might not have a huge impact, but as a pattern it can.

[tonray]

14 hours ago, Pib said:

Don't worry about an bank building entrance fee.

That's correct...a good plan would be to allow free entrance and only charge a fee if you want to exit...