BoT to regulate personal debt to cut soaring household debt

[webfact]

BoT to regulate personal debt to cut soaring household debt

 

 

BANGKOK, 12 May 2017 (NNT) – The Bank of Thailand (BoT) has joined hands with the Thai Bankers Association to seek ways to lower the personal credit ceiling to remedy the problem of young citizens accruing high debt. 

BoT Governor Weerathai Santipraphob revealed that on May 17 the bank will join other financial institutions to announce measures to tackle household debt after finding the rate rising rapidly and many citizens now buried in debt. 

The central bank and its alliances will first work to teach financial discipline while also seeking to have credit providers be straight forward with their clients about the risks of debt. 

Weerathai remarked that household debt is a major national problem and is an obstacle to equality in Thailand. He said it comprises many dimensions, from citizens themselves to financial institutions. 

Initial information is that the central bank will bring down the ceiling for personal credit for citizens between the ages of 18 and 34. Presently, citizens can have debt 5 times their income but the allowance maybe brought down to 3 times. They also may have a limit imposes as to how many credit cards an individual can hold.

 

-- nnt 2017-05-12

[jonclark]

Sounds like a good idea. 

 

 

[simoh1490]

Seems like a good idea but runs the risk of forcing people into the hands of loan sharks, frying pan to fire as they say.

[vadid]

Good. Is it too much to hope that Thai banks in order to replace the profits lost from these restrictions will perhaps make it easier for retired ex-pats with secure pensions and decades of financial prudence to get credit cards and to borrow? Yes it probably is.

[simoh1490]

Just now, vadid said:

Good. Is it too much to hope that Thai banks in order to replace the profits lost from these restrictions will perhaps make it easier for retired ex-pats with secure pensions and decades of financial prudence to get credit cards and to borrow? Yes it probably is.

It not that hard to do, I'm a retired expat and UOB offered me a credit card without me even having to ask for it, plus they haven't tied up any of my funds as security, I was quite surprised - 300K credit limit. Maybe you should go ask your bank, or better still, ask UOB.

[lordblackader]

Not sure why people think this is good. Constraining consumer finance at a time growth is at near record lows is not sound macro-economic policy. The Government should be encouraging people to spend more. 

[simoh1490]

2 minutes ago, lordblackader said:

Not sure why people think this is good. Constraining consumer finance at a time growth is at near record lows is not sound macro-economic policy. The Government should be encouraging people to spend more. 

High consumer debt levels puts banks at risk if the NPL go too high, not to mention the negative social impact - consumer led recoveries are a tool of the West, not that useful in a low earning economy such as Thailand.

Edited May 12, 2017 by simoh1490

[trogers]

The US place barriers to companies offering credit cards to those below the age of 21.

 

Time for Thailand to follow suit. Achieving economic growth through growing debts is like feeding the habits of drug addicts and postponing the day of disaster.. 

[ratcatcher]

1 hour ago, simoh1490 said:

It not that hard to do, I'm a retired expat and UOB offered me a credit card without me even having to ask for it, plus they haven't tied up any of my funds as security, I was quite surprised - 300K credit limit. Maybe you should go ask your bank, or better still, ask UOB.

The question should be

"Are you young, got no money, want a new car, new iPhone, new big TV?" 

[clockman]

With loan sharks in every village, and who controls these?

[pentap]

It's nice to read the concerns but the Banks are one of the biggest problems as are other money lenders.

People need money!
They need properly paid employment!
A functioning social care system.
Taxes collected where owed etc...
They claim 1% or less unemployment but how many work for cash in hand? Or work on a regular weekly basis?
How many small shops, street vendors etc, pay taxes?

The whole social climate should be scrutinised. It's easy to say that personal debt is high, but many factors come into it. People need to live and the only way to do that, is to borrow.

Not rocket science!

[simoh1490]

3 minutes ago, pentap said:

It's nice to read the concerns but the Banks are one of the biggest problems as are other money lenders.

People need money!
They need properly paid employment!
A functioning social care system.
Taxes collected where owed etc...
They claim 1% or less unemployment but how many work for cash in hand? Or work on a regular weekly basis?
How many small shops, street vendors etc, pay taxes?

The whole social climate should be scrutinised. It's easy to say that personal debt is high, but many factors come into it. People need to live and the only way to do that, is to borrow.

Not rocket science!
 

"A functioning social care system". - you are a product of the West if you think people here need such things, open your eyes and turn your head around. BTW about 2% of the population pays taxes on a payroll basis, consider that by comparison to the West perhaps.

Edited May 12, 2017 by simoh1490

[wakeupplease]

Weerathai remarked that household debt is a major national problem

 

Um I wonder what causes this? So the facebook pages I read about locals selling lots of their prize possessions must be because they also are skint.

 

Next Sub Please

[midas]

" The central bank and its alliances will first work to teach financial discipline "

 

How about starting with the idea that you don't need to buy a new car unless you can really afford the repayments

[trogers]

1 hour ago, wakeupplease said:

Weerathai remarked that household debt is a major national problem

 

Um I wonder what causes this? So the facebook pages I read about locals selling lots of their prize possessions must be because they also are skint.

 

Next Sub Please

But, but...my sixth child is due to be born coming August and I can't sit 8 on my motorcycle. A pickup would be needed...even if the instalments eat up 2/3 of our household income...

[wakeupplease]

33 minutes ago, trogers said:

But, but...my sixth child is due to be born coming August and I can't sit 8 on my motorcycle. A pickup would be needed...even if the instalments eat up 2/3 of our household income...

I fully understand. You have been a very busy man, well done. Get an SV it will be cheaper and they can all sit in the back without fear of being nicked.

[maoro2013]

19 hours ago, webfact said:

Presently, citizens can have debt 5 times their income

What income, monthly, annual?

 

How irresponsible are the banks, they must cost themselves a lot in unrecoverable loans.

[williamgeorgeallen]

20 hours ago, jonclark said:

Sounds like a good idea. 

 

 

sounds like something that is very difficult and not likely to be enforced. most countries economies now run on debt. constrict the access to easy credit means constricting the economy. 

[williamgeorgeallen]

15 hours ago, pentap said:

It's nice to read the concerns but the Banks are one of the biggest problems as are other money lenders.

People need money!
They need properly paid employment!
A functioning social care system.
Taxes collected where owed etc...
They claim 1% or less unemployment but how many work for cash in hand? Or work on a regular weekly basis?
How many small shops, street vendors etc, pay taxes?

The whole social climate should be scrutinised. It's easy to say that personal debt is high, but many factors come into it. People need to live and the only way to do that, is to borrow.

Not rocket science!
 

seems the necessity for submarines comes first. find some logic in that. have to wonder why the general public drowning in debt arent more upset. then again the army is probably doing the same thing, borrowing money to buy un necessary toys.

[worgeordie]

If only Governments could keep their spending and mounting debt,in control

they could be a good example to their populations,this is a Worldwide problem,

it's a "I want it and I want it now" society.

regards worgeordie

[Krataiboy]

BoT . . . will join other financial institutions to announce measures to tackle household debt after finding the rate rising rapidly and many citizens now buried in debt. 

 

Ah, that old familiar creaking sound as yet another stable door closes. Too little, too late - again.

 

 

[jerojero]

No, the ruling Elite who often are above the law and defamation laws are the obstacles to equality.

[SiamBeast]

How about banning the advertising of "buy now, pay later" furniture?

How about placing a ceiling on interest rates that credit card companies can charge?

How placing an upper limit on mortgage interest rates?

 

Last but not least: Educating the population that "credit is not cash". This is a long battle but I'm pretty sure it can be done.

My wife and I have a strict principle: If you can't buy it cash, you don't need it (exception: income-generating assets such as rental properties). We have a few vehicles and property, but zero debt. Niet. Nada. Our house isn't fancy, and it is a bit smaller than the others in the mooban, but at least, we didn't need a mortgage. It feels good to wake up in the morning and know that you do not owe money to anyone.

 

A few other fancy ideas:

- Having a licence plate system where a certain color means that the car has a loan, and another color means that the car is debt-free. It would stop people from drowning in debt to buy a Benz to impress people.

- Do not offer any tax deduction for mortgage interest payments. It would stop people from buying a bigger house than they need.

- Ban the little cute ladies that run after you in shopping malls to offer you a "free credit card" with no interest for X months.

 

Sadly I don't think this is gonna happen - people might want to get in debt to buy submaries. Who knows...

 

Edited May 13, 2017 by SiamBeast

[gk10002000]

On 5/12/2017 at 4:35 AM, lordblackader said:

Not sure why people think this is good. Constraining consumer finance at a time growth is at near record lows is not sound macro-economic policy. The Government should be encouraging people to spend more. 

Reminds when George Bush Jr. took office.  Didn't he say something like people should go out and spend to help stimulate the economy.  I would have preferred words such as "the government will now work more efficiently, streamline offices, spend less money, lower taxes for the common man, etc

[simoh1490]

15 minutes ago, gk10002000 said:

Reminds when George Bush Jr. took office.  Didn't he say something like people should go out and spend to help stimulate the economy.  I would have preferred words such as "the government will now work more efficiently, streamline offices, spend less money, lower taxes for the common man, etc

For a governement to spend less means taking something(s) away from people and generally that doesn't go down too well with the population. It also means that GDP shrinks and when it does so for two successive quarters, that's defined as a recession and people/businesses stop spending/investing, growth turns negative, interest rates fall and unemployment rises. Be careful what you wish for!

[Rhys]

2 hours ago, SiamBeast said:

How about banning the advertising of "buy now, pay later" furniture?

How about placing a ceiling on interest rates that credit card companies can charge?

How placing an upper limit on mortgage interest rates?

 

Last but not least: Educating the population that "credit is not cash". This is a long battle but I'm pretty sure it can be done.

My wife and I have a strict principle: If you can't buy it cash, you don't need it (exception: income-generating assets such as rental properties). We have a few vehicles and property, but zero debt. Niet. Nada. Our house isn't fancy, and it is a bit smaller than the others in the mooban, but at least, we didn't need a mortgage. It feels good to wake up in the morning and know that you do not owe money to anyone.

 

A few other fancy ideas:

- Having a licence plate system where a certain color means that the car has a loan, and another color means that the car is debt-free. It would stop people from drowning in debt to buy a Benz to impress people.

- Do not offer any tax deduction for mortgage interest payments. It would stop people from buying a bigger house than they need.

- Ban the little cute ladies that run after you in shopping malls to offer you a "free credit card" with no interest for X months.

 

Sadly I don't think this is gonna happen - people might want to get in debt to buy submaries. Who knows...

 

 

...simply, live within your means... the B Way...

[Nowisee]

When or as more people start defaulting on their loans, and they eventually will, the banking industry and the credit finance lenders will have a hard time continuing to hide the real household debt issue.

 

 

Edited May 14, 2017 by Nowisee

[simoh1490]

4 minutes ago, Nowisee said:

When or as more people start defaulting on their loans, and they eventually will, the banking industry and the credit finance lenders will have a hard time continuing to hide the real household debt issue.

 

 

Non-performing loans in Thailands banks: https://www.bot.or.th/English/Statistics/Graph/Pages/NPL.aspx

 

Currently about the same ratio as the UK: http://data.worldbank.org/indicator/FB.AST.NPER.ZS

 

[trogers]

14 minutes ago, Nowisee said:

When or as more people start defaulting on their loans, and they eventually will, the banking industry and the credit finance lenders will have a hard time continuing to hide the real household debt issue.

 

 

The creditors will definitely stop giving out easy credit when their collectors face more drawn pistols...as seen on Reality TV...

[Pib]

Quote

BANGKOK, 12 May 2017 (NNT) – The Bank of Thailand (BoT) has joined hands with the Thai Bankers Association to seek ways to lower the personal credit ceiling to remedy the problem of young citizens accruing high debt. 

 

Just lower the cost of flagship model smartphones and/or only allow a smartphone upgrade to a new model every 3 years....this will cut young people's debt in half.