Central bank orders cut in interest rates across the board

[snoop1130]

Central bank orders cut in interest rates across the board

By THE NATION

 

 

The Bank of Thailand (BOT) has ordered commercial banks and non-banking entities to cut down the interest rates they charge for credit cards, personal credit and hire purchase by 2 to 4 per cent in a move to help people struggling with debt due to the Covid-19 crisis.

 

On Wednesday (June 17), the central bank invited the representatives of financial institutions to inform them about the remedial measures created to help people overwhelmed with household debt, such as outstanding credit card bills, car payments and home mortgages. 

 

This reduction will standardise interest charged by banks and non-banking entities, unlike the measure issued in late April, which allowed banks to help their customers as per their discretion. 

 

The central bank said interest rate will be cut in general, not just for consumers affected by Covid-19. 

 

BOT also plans to expand the financial coverage limit on all credit cards as well as personal credit and cash cards. 

 

Source: https://www.nationthailand.com/news/30389859?utm_source=category&utm_medium=internal_referral

 

-- © Copyright The Nation Thailand 2020-06-18

 

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[Stocky]

2 minutes ago, snoop1130 said:

a move to help people struggling with debt due to the Covid-19 crisis.

It only helps those financial sound enough to borrow from a bank, i.e. the already wealthy.

 

The average Thai is more likely to be borrowing from the local loan shark, and I don't see them dropping interest rates by 2 to 4%, though even if they did it's small relief on loans charged at more than 25% per annum.

[worgeordie]

Does this mean anyone with money in the Bank will end up having

to pay to have it in there, I cannot see them cutting rates on loans,

credit cards ,etc, without lowering the interest they give on deposits,

which at the moment is minimal,it seems everything is been done to

help people that are in debt.

regards worgeordie

[TallGuyJohninBKK]

5 minutes ago, Stocky said:

It only helps those financial sound enough to borrow from a bank, i.e. the already wealthy.

 

The average Thai is more likely to be borrowing from the local loan shark, and I don't see them dropping interest rates by 2 to 4%, though even if they did it's small relief on loans charged at more than 25% per annum.

 

I don't know any Thai loan sharks that charge as LITTLE as 25% APR...

 

But I do know legal lenders like AEON, Umay and others were routinely charging 28% APR... So jack that rate up substantially, and you'll probably begin to get a sense where the loan sharks are at.

 

The loan sharks, of course, could care less what the BOT regulates, as they operate outside the law and regulation.

 

Edited June 18, 2020 by TallGuyJohninBKK

[Stocky]

2 minutes ago, TallGuyJohninBKK said:

I don't know any Thai loan sharks that charge as LITTLE as 25% APR

I did say "more than 25% per annum" - but you understand my point.

[connda]

Good.  It's predatory the way that the banks pay almost no interest to depositors and then turn around and charge those with loans and especially credit cards absolutely usurious rates.
The entire industry lives on the predation of those in debt. 

[TallGuyJohninBKK]

34 minutes ago, connda said:

The entire industry lives on the predation of those in debt. 

 

I helped my wife get out of her own credit card debt in the past year by forcing her to properly manage her money, avoid stupid Thai family spending and stick to a payoff payments schedule, all of which she did...

 

Her standard Thai bank credit cards at the time were charging 18% APR, and her finance industry cards like AEON and Umay were charging 28%.  And what were the banks paying for interest on deposits during that time, 1-2%?

 

[baansgr]

59 minutes ago, worgeordie said:

Does this mean anyone with money in the Bank will end up having

to pay to have it in there, I cannot see them cutting rates on loans,

credit cards ,etc, without lowering the interest they give on deposits,

which at the moment is minimal,it seems everything is been done to

help people that are in debt.

regards worgeordie

I can't fathom out how "high interest" savings accounts in UK are paying about 0.7% yet arranged overdraft interest is 40%...thieves

[sammieuk1]

Interest rates down baht up how much more mysterious can this get???? 

[worgeordie]

3 hours ago, baansgr said:

I can't fathom out how "high interest" savings accounts in UK are paying about 0.7% yet arranged overdraft interest is 40%...thieves

Yes and taxpayers money was used to save them,but they cannot help themselves...and still screw us.

regards worgeordie

[Trillian]

Various governments over the years have established programs to try and wean people off of loan shark loans but the loans are so easy to obtain that they keep going back and taking out more - these programs include cheap government loans to repay the loan sharks.

 

But the problem is much bigger than just loan sharks, almost all Thai people have no financial discipline and over 75%  have defaulted on a loan at some point.

 

https://www.thaiexaminer.com/thai-news-foreigners/2018/10/08/debt-in-thailand-loans-bankruptcy-teachers/

https://www.wsj.com/articles/thailand-introduces-loans-to-help-struggling-farmers-1409056282

 

[Trillian]

10 hours ago, worgeordie said:

Does this mean anyone with money in the Bank will end up having

to pay to have it in there, I cannot see them cutting rates on loans,

credit cards ,etc, without lowering the interest they give on deposits,

which at the moment is minimal,it seems everything is been done to

help people that are in debt.

regards worgeordie

No, it doesn't mean that the central bank rate is going negative, just that the lending rates are being reduced so the bank/finance house margins are being squeezed, a good thing too. 

[worgeordie]

3 hours ago, Trillian said:

No, it doesn't mean that the central bank rate is going negative, just that the lending rates are being reduced so the bank/finance house margins are being squeezed, a good thing too. 

Yes I understand the part where Bank of Thailand has told banks to lower

the rates they charge,but I have never known a bank lower the rate they

charge without lowering the rate they give on deposits,and as the rates

that they now offer for deposits are so low ,even a small drop would result

in negative rates,lets wait  and see.

regards worgeordie

[Trillian]

1 minute ago, worgeordie said:

Yes I understand the part where Bank of Thailand has told banks to lower

the rates they charge,but I have never known a bank lower the rate they

charge without lowering the rate they give on deposits,and as the rates

that they now offer for deposits are so low ,even a small drop would result

in negative rates,lets wait  and see.

regards worgeordie

I think it's because Thai banks have this Minimum Lending Rate (MLR) which gives them a 5.5% cushion above the Central Bank Rate. Prime customers can get MLR -3% or so but that's still a guaranteed spread that's quite hefty, especially since it increases whenever the BOT rate increases.

 

https://tradingeconomics.com/thailand/bank-lending-rate

[Bender Rodriguez]

15 hours ago, worgeordie said:

Does this mean anyone with money in the Bank will end up having

to pay to have it in there, I cannot see them cutting rates on loans,

credit cards ,etc, without lowering the interest they give on deposits,

which at the moment is minimal,it seems everything is been done to

help people that are in debt.

regards worgeordie

they already lowered without warning

[brain150]

Pure Socialism !

 

A bank is a private business ! To loan money is a contract !

 

If the BOT can tell the banks how much interest they can charge

then how long is it going to take until they tell me how much

I can charge my clients for my service ?

 

This is Socialism in the making on a huge scale ! .... China 2.0 here we come.

... but people will love it just like wearing masks, using mobile apps for surveillance and many more

very nice things to come very soon !

 

Let the market sort out the problem !

BTW: The whole problem was created by the Government !!! All this is a result of Government action !!!

And who ever still believes in a Pandemic should go back to sleep and dream on !!!

[fulhamster]

16 hours ago, sammieuk1 said:

Interest rates down baht up how much more mysterious can this get???? 

THe baht only goes one way????????

[Andy from Kent]

17 hours ago, worgeordie said:

it seems everything is been done to

help people that are in debt.

 While reading the OP I thought that was the reason for the interest rate drop.

 

 "in a move to help people struggling with debt due to the Covid-19 crisis."

 

[worgeordie]

21 minutes ago, Andy from Kent said:

 While reading the OP I thought that was the reason for the interest rate drop.

 

 "in a move to help people struggling with debt due to the Covid-19 crisis."

 

Most were in debt long before the Covid 19 crisis.

regards Worgeordie

[digger70]

18 hours ago, worgeordie said:

Does this mean anyone with money in the Bank will end up having

to pay to have it in there, I cannot see them cutting rates on loans,

credit cards ,etc, without lowering the interest they give on deposits,

which at the moment is minimal,it seems everything is been done to

help people that are in debt.

regards worgeordie

Won't be long before one has to pay the bank to keep ones money in there .

Just look at the Netherlands they are just about there now.  the only trouble with that is that one gets paid the money  in to the bank ,one must have a bank account. ☹️

Standard Savings Accounts Rates Netherlands

Bank	Account	Interest Rate	Deposit Guarantee
Lloyds Bank	Internet Spaarrekening	0.20%	DE
LeasePlan Bank	Flexibel Sparen	0.15%	NL
NIBC Direct	Internetspaarrekening	0.15%	NL
Argenta	Internet Spaarrekening	0.10%	BE
DHB Bank (Demir-Halk Bank)	DHB VoorSpoedrekening	0.10%	NL
Nationale Nederlanden	Internetsparen	0.10%	NL
Yapi-Kredi	Euro-Plus Savings Account	0.10%	NL
Anadolubank	Alfa Smart Savings	0.08%	NL
KNAB	Flexibel Sparen	0.06%	NL	Info
Garanti Bank	Gouden Internet Rekening	0.05%	NL
SNS Bank	Internet Sparen	0.01%	NL
ASN Bank	Ideaalsparen	0.01%	NL
ING Bank	Oranje Spaarrekening	0.01%	NL
Rabobank	Rabo InternetSparen	0.01%	NL
ABN AMRO	Direct Sparen	0.00%	NL
Triodos Bank	Internet Sparen	0.00%	NL
Van Lanschot Bank	Spaarrekeningen	0.00%	NL

These are variable interest rates and can change at any time. ABN AMRO offers a negative rate of -0.50% for balances over €2,500,000.

[Krataiboy]

18 hours ago, worgeordie said:

Does this mean anyone with money in the Bank will end up having

to pay to have it in there, I cannot see them cutting rates on loans,

credit cards ,etc, without lowering the interest they give on deposits,

which at the moment is minimal,it seems everything is been done to

help people that are in debt.

regards worgeordie

Yes. And with record low returns on deposits, many of us already are paying them to keep it. In essence, it's a bank bail-out by Jo Public.

 

Worse is to come when we go cashless and all payments will become electronic. With all our money in digital form on their computers, will have the power to decide whether or not to let us "borrow" our own money to buy goods and services. 

 

Not only that, but with no cash machines to dispense real money, a glitch in a bank's computerised system could leave us without the means to buy anything or pay bills. Add to this the risks of electronic hacking and going cashless is rather less rosy than painted by its advocates.

 

Money in our pockets equals freedom. The lack of it will makes us all debt slaves. Which is why we should say 'No' to killing cash!

[Cake Monster]

3 hours ago, worgeordie said:

Most were in debt long before the Covid 19 crisis.

regards Worgeordie

Thai household debt was close to 77% prior to the Covid outbreak.

Now it is dangerously close to the 80% level imposed as cut off point.

Also NPL are  increasing, and to reduce the interest on Loans could slow the pace of NPl Loans going delinquent.

All the restructuring of these debts is never going to get all the money owed paid back- and its a massive amount, and for sure NPL will increase to around 8% of book loan value in the next few months

 

[Trillian]

3 minutes ago, Cake Monster said:

Thai household debt was close to 77% prior to the Covid outbreak.

Now it is dangerously close to the 80% level imposed as cut off point.

Also NPL are  increasing, and to reduce the interest on Loans could slow the pace of NPl Loans going delinquent.

All the restructuring of these debts is never going to get all the money owed paid back- and its a massive amount, and for sure NPL will increase to around 8% of book loan value in the next few months

 

I don't believe there is a cutoff point for consumer (household debt), I think you are perhaps thinking of government external debt which is not allowed to be more than 60% of GDP.

 

And as GDP shrinks the percentage of consumer debt will increase automatically, even if borrowings have not increased since it is measured as percentage of GDP.

[Baerboxer]

21 hours ago, worgeordie said:

Does this mean anyone with money in the Bank will end up having

to pay to have it in there, I cannot see them cutting rates on loans,

credit cards ,etc, without lowering the interest they give on deposits,

which at the moment is minimal,it seems everything is been done to

help people that are in debt.

regards worgeordie

 

Same in the UK and other European countries. So much personal household debt they can't let it all go bad and default.

 

My UK super duper special "premier saving account" recently lowered the interest rate to .01%! Offshore rates are better but not exactly exciting. 

 

I had better bank interest rates on various accounts in Thailand for several years. Now they're going the same way as the others.

 

I believe there are some EU countries that already have negative interest rates i.e. you have to pay the bank to look after, and use, your money!

[worgeordie]

1 hour ago, Cake Monster said:

Thai household debt was close to 77% prior to the Covid outbreak.

Now it is dangerously close to the 80% level imposed as cut off point.

Also NPL are  increasing, and to reduce the interest on Loans could slow the pace of NPl Loans going delinquent.

All the restructuring of these debts is never going to get all the money owed paid back- and its a massive amount, and for sure NPL will increase to around 8% of book loan value in the next few months

 

I wonder if Thai household debt includes all of the debt  teachers and other civil servants 

 have with their  credit unions* ( *cannot remember the name,) maybe a government thing

where they can get favorable loans from, that's also owed a lot of money.

 

The whole World is in debt now,populations are only following what their Governments are

doing,spend,spend spend, saving for your future seems to be a thing of the past now.

regards worgordie