Proposal to erase borrowers’ repayment records is fraught with danger

[webfact]

 

As the general election approaches, rival political parties have unveiled their policy pledges designed to lure voters. Parties usually make promises that could make an immediate impact, without taking into account the long-term ramifications. 

 

One of the controversial proposals is by the Chart Pattana Kla Party, which has promised to erase the debt repayment records of borrowers. The party claims that such a record becomes a blacklist for those who failed to repay their debt in the past, and prevents them from getting new loans from banks or non-bank institutions. Deleting the past record would give them access to bank loans, according to the party’s narrative.

 

Korn Chatikavanij, leader of the party, has proposed a credit score system to replace the current credit information system.  A credit score system will take into account loan applicants’ income and daily spending, he explains.

 

Korn, a former finance minister, said new loan criteria was needed because millions of Thais had been blacklisted by the national credit bureau for being unable to make debt repayments amid the pandemic fallout and the high cost of living.

 

Korn explained that the credit score system he is proposing would measure repayment ability and was partly derived from debt-payment records. It also includes data on paying other bills, such as mobile phone, internet, water and electricity bills.

 

Evolution of credit reporting 

 

The National Credit Bureau Co (NCB) has evolved over a long time. In the initial stages, it was a little-known small unit under the Bank of Thailand (BOT) that collected credit information. But when the Asian financial crisis hit Thailand in 1997, the Finance Ministry gave serious thought to creating a full-fledged credit reporting system.

 

Full story: https://www.thaipbsworld.com/proposal-to-erase-borrowers-repayment-records-is-fraught-with-danger/

 

-- © Copyright Thai PBS 2023-02-08

 

- Cigna offers a range of visa-compliant plans that meet the minimum requirement of medical treatment, including COVID-19, up to THB 3m. For more information on all expat health insurance plans click here.

 

The most versatile and flexible rental investment and holiday home solution in Thailand - click for more information.

[hotchilli]

5 hours ago, webfact said:

Korn Chatikavanij, leader of the party, has proposed a credit score system to replace the current credit information system.  A credit score system will take into account loan applicants’ income and daily spending, he explains.

 

5 hours ago, webfact said:

Korn explained that the credit score system he is proposing would measure repayment ability and was partly derived from debt-payment records. It also includes data on paying other bills, such as mobile phone, internet, water and electricity bills.

Which is something all money lending institutions should do?

[bangon04]

The Credit Score proposal would obviously require previous defaulters to actually improve their money-handling skills......  it should be a no-brainer, but who knows?

[Cake Monster]

7 hours ago, webfact said:

One of the controversial proposals is by the Chart Pattana Kla Party, which has promised to erase the debt repayment records of borrowers. The party claims that such a record becomes a blacklist for those who failed to repay their debt in the past, and prevents them from getting new loans from banks or non-bank institutions. Deleting the past record would give them access to bank loans, according to the party’s narrative.

Lunacy !

And this party wants to Govern the Country

[OneMoreFarang]

Let us guess: What will happen if banks give money to people who were not able to pay for previous loans?

Who comes up with those ideas?

 

 

[Sir Dude]

Ridiculous idea, got trouble stamped all over it. What about all the responsible and diligent people who honour their commitments? What's in it for them? What you will get is all the "live today and screw tomorrow brigade" pile straight down the nearest lender and attempt to scam as much as possible out of them, then go right back to defaulting on repayments... Duh!

[zzaa09]

18 minutes ago, OneMoreFarang said:

Let us guess: What will happen if banks give money to people who were not able to pay for previous loans?

Who comes up with those ideas?

 

 

The cycle of corrupted shenanigans never gets old. 

Actually - in most instances within these particular Thai political circles, it's a way of life.

[blackcab]

The National Credit Bureau stores information for 3 years. That's not a particularly long time if you have defaulted on debt.

 

By the time this law would be passed and effective the reason for it's existence (debt default due to the pandemic) would not exist any more as all pandemic related defaults would be more than 3 years old.

[OneMoreFarang]

How about this suggestion for the new politicians.

Educate children in school that there is no money-tree.

Spend only as much as you have.

Only because your neighbor has a pickup doesn't mean you also have to buy one.

And it is also possible to watch TV with a smaller TV set and call people with a cheap phone.

And last but not least: If you learn a lot you will be able to do good work and then you will make more money.

 

But all of above obviously doesn't matter as long as the bank is still willing to give you a loan... 

[SoilSpoil]

38 minutes ago, OneMoreFarang said:

Let us guess: What will happen if banks give money to people who were not able to pay for previous loans?

Who comes up with those ideas?

 

 

Couple of US banks in the early 2000's. 

[kidneyw]

30 minutes ago, OneMoreFarang said:

How about this suggestion for the new politicians.

Educate children in school that there is no money-tree.

Spend only as much as you have.

Only because your neighbor has a pickup doesn't mean you also have to buy one.

And it is also possible to watch TV with a smaller TV set and call people with a cheap phone.

And last but not least: If you learn a lot you will be able to do good work and then you will make more money.

 

But all of above obviously doesn't matter as long as the bank is still willing to give you a loan... 

Party Pooper

[new2here]

7 hours ago, hotchilli said:

 

Which is something all money lending institutions should do?

absolutely agree.  To me, to be as accurate a barometer as possible, you’d WANT as much verifiable related data as you could get..  So, you bet, smaller bills like post-paid mobile, utilities etc., to me should all be a part of the total picture.

 

Yes, i think that some should carry a larger “weight” in terms of the scoring model, but i do think it should include other forms of debt management - not just the classic credit card and such.

[Sqoop]

It's a crazy idea, it's not just data but debt held by lenders. What happens to the stability of the banking sector if debt obligations are negated ? 

 

At a time of financial turmoil these institutions could become insolvent and then bail in laws would have to be used.