Thailand: Credit card firms to meet BoT as debt accumulates
The Credit Card Club, a unit of the Thai Bankers’ Association, plans to meet with the Bank of Thailand to share information about the credit card market to address the regulator’s concerns over rising household debt stemming from unsecured loans.
The club has 16 members, mostly credit card providers from commercial banks and large non-banks, such as Krungthai Card and Aeon Thana Sinsap (Thailand) Plc.
Credit cardholders with a minimum income of 20,000-30,000 baht per month make up the majority of their customers, said club chairman Atis Ruchirawat.
Mr Atis said the club would share information with the central bank on customer segments in terms of purchasing power, debt repayment ability, and risks.
According to central bank regulations, the minimum income for credit card applicants is 15,000 baht per month, with the maximum interest rate set at 18% per year.
Credit card providers do not classify their customers as vulnerable borrowers if they have a higher debt payment ability and financial discipline. Some 90% of customers pay their full credit card debt by the monthly due date rather than keeping the debt running by paying the minimum amount, according to the club.
Customers for unsecured loan products, covering credit cards and personal loans, are not considered to be in the vulnerable segment under the definitions used by credit card providers, Mr Atis said.
He said some credit card marketing campaigns, including those offering monthly payments with zero interest, would help customers better manage their expenditure.
The campaigns are in line with particular customer spending categories or customer segments, he said.
The central bank plans to ask financial institutions to stop promoting unnecessary unsecured loans early next year in an effort to curb household debt. The Bank of Thailand wants to see household debt below 80% of GDP, down from the current 88%.
Mr Atis said the club is ready to collaborate with the regulator in reducing the country’s household debt and conducting responsible lending.
The credit card business has been picking up, in line with Thailand’s economic recovery and pent-up demand from the pandemic. Card spending in the final quarter of this year is showing signs of improvement, he said.
Mr Atis, who is managing director of general card services under Bank of Ayudhya (Krungsri), said spending on Krungsri credit cards, including the co-branded Central The 1, has been rising. Non-performing credit card loans have been falling, compared with a significant increase during 2020-2021.
Central The 1 Credit Card launched a new card yesterday targeting younger customers, aiming for total spending of 95 billion baht on all its products in 2022, up 25% year-on-year. The provider expects to enrol 120,000 new customers for its youth-oriented credit card in 2023.