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Bank of Thailand revises new rules on default on interest rates Help reduce debt burden, effective April 1.
On November 8, Mr. Anucha Buraphachaisri, spokesman for the Prime Minister’s Office, revealed that the Bank of Thailand (BOT) issued a notice prescribing the rules. On the interest charge, default and amortization of debt In order to help reduce the burden of debt Create equity in the provision of financial services to people. And reduce the incidence of delinquency in the financial system These criteria will lead to significant changes in the Thai financial system in three areas:
1. Calculation of default interest based on “The actual default principal” The main part of future installments that are not yet due is excluded. This is different from the previous practice than if the default is just a fee. The financial services provider may charge default interest on the total outstanding principal. Resulting in a very high default interest value This new criterion will make the default interest charge consistent with reality. And be more fair to people
2. Determination of the interest rate for failure to pay the debt. “Interest rate of the contract plus no more than 3%” For example, if the contractual interest rate is 8%, the financial services provider can set the default interest rate up to 11%, taking into account past debt history. Originally, financial service providers could set predetermined interest rates. Self-repayment, for example, according to the maximum interest rate in the Civil and Commercial Code of 15% or in some cases up to 18% or 22% affects the debt service capacity of the debtor. It will help the debtor to try to pay off the debt. Reduce the possibility of default. And it also helps balance the financial system. Litigation will be reduced.
Y 3. Determination of the order of amortization by “Cancel the longest overdue installments first” so that the debtor clearly knows the order of amortization. When the debtor pays the debt The money paid will be used first to pay the interest and principal of the installment. Unlike the traditional way, the money paid will be charged at all rates. Followed by any interest Before bringing the remainder to pay off the principal The new threshold will increase the opportunity of the debtor’s installment payments each month. You can cut the principal further Help reduce the incidence of delinquent debt or NPL, as well as encourage the debtor to pay the debt on an ongoing basis. It also helps make the debtor’s payment history more consistent with the facts.
The announcement of the determination of the calculation of the predetermined interest rate will be effective as of April 1, 2021, except for the amortization sequence that will take effect as of July 1, 2021 due to financial service providers. It takes time to improve the relevant work system. However, for the calculation of the default payment, the Bank of Thailand has previously had a circular. Since May 1, 2020, financial service providers have adopted new criteria in their calculations. Individuals and SMEs generally have the rights prescribed in this advertisement without having to contact the branch of a financial services provider to modify the contract at all. For the default on debt that occurred before April 1, 2021, the Bank of Thailand has notified financial service providers to apply the principles of The new announcement is used to consider the exemption or bonus for non-payment of interest payments to debtors as appropriate, especially today, where many debtors are suffering from the Covid-19 crisis, if people have concerns or are not treated fairly. Queries or complaints can be made at the Financial Consumer Protection Center (Friday), Tel. 1213.
Mr. Anucha said Criteria for calculating debt default According to the Bank of Thailand announcement, the 3 issues, whether it is an interest on the default on debt payment only in the amount of the actual payment of the default Not all accruals O on the predetermined interest rate, which can be added up to 3% of the contractual interest rate OR matters that are required when the debtor has paid the money, said amount will be paid first in the most late installment. These 3 issues will lead to a big change in the practice of Paying Thai Debt It will help make it fairer for the debtor. And help debtors who do not intend to default To be able to pay off debt more easily Resulting in reducing the number of litigation It will also reduce the possibility of bad debts in the Thai financial system in general.
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