Thailand
Thailand: BoT urged to keep credit card measure
The credit card club of the Thai Bankers’ Association has proposed the central bank maintain a minimum debt payment measure for credit cards to help alleviate the financial burden on consumers during the country’s uneven economic recovery.
Atis Ruchirawat, managing director of General Card Services Ltd, which runs Central The 1 Credit Card, and chairman of the club, said the card providers proposed the Bank of Thailand keep the minimum debt payment rate at 5% once the central bank’s financial relief measures for individual borrowers expire on June 30. Normally the minimum rate is set at 10%.
The central bank has periodically discussed with financial institutions including credit card providers about an extension of its debt relief measures for retail loans.
“Regarding higher minimum debt payment of 8%, the regulator may need to implement other debt refinance schemes to help borrowers who still cannot pay. Whether to extend the debt relief measures or introduce other relaxation measures is the central bank’s consideration,” he said.
In the past, the minimum credit card payment rate was set at 5%, before being raised to 10% prior to the virus crisis.
Mr Atis said a hike in the minimum credit card payment would definitely affect the credit cardholders’ debt payment ability.
Given the country’s uneven economic recovery, many borrowers will be hurt if the minimum debt payment measure on credit cards is not extended, he said.
Even worse, credit card non-performing loans would keep rising this year, warned Mr Atis.
He said the central bank also required financial institutions to prolong existing debt relief measures for retail loans on a case-by-case basis.
For credit card business, the minimum repayment rate was proposed to be extended until the end of this year, with the ceiling interest rate of 16% per year possibly extended to next year. These proposals have not been finalised.
Mr Atis said his company would extend financial assistance for Central The 1 cardholders until the end of this year, and it could be prolonged to next year.
For the first quarter of 2021, new credit card issuance was projected to contract by 20-30% compared with the same period last year, given the Covid-19 impact. Credit card spending is expected to decline 5-15% year-on-year.
Overall credit card business is expected to pick up in the second quarter, with peak spending that quarter mainly because of a low-base effect from the previous year.
New credit card issuance is expected to grow 5-10% this year, with spending growth of 5-20% from the previous year, he said.
Source: https://www.bangkokpost.com/business/2093455/bot-urged-to-keep-credit-card-measure