The Bank of Thailand has asked commercial banks to focus on managing capital at a time when millions of people are feeling the pain of the economic shock of Covid-19. The Bank of Thailand has ordered Thai commercial banks to freeze interim dividends paid to shareholders. And also suspend share buybacks to preserve capital in an economy devastated by the Covid-19 pandemic.
Bank of Thailand Governor Veerathai Santiprabhob said Covid-19 had had widespread effects on businesses and the general public. The Bank of Thailand has ordered commercial banks to develop management plans for the next three years.
While those plans are in the works, he said, payments due in the middle of this year and share buybacks will be suspended.
“Phase 2” of Covid-19 relief measures
Meanwhile, the Bank of Thailand and nine financial institutions have agreed on “phase 2” of the Covid-19 relief measures. Including interest rate cuts, said Ronadol Numonda, deputy governor in charge of the stability of financial institutions.
Repayment deadlines and minimum amounts would also be taken into account, he added.
Debt relief measures announced on Friday include interest rate cuts of 2 to 4 percentage points for credit cards and personal loans.
The maximum interest rate for credit cards will drop from 18% to 16% per annum, while rates for personal loans will drop from 28% to 24-25%, effective Aug. 1, the BoT said.
The new rates for revolving credits and installment credits will be 25%. Auto title loans will carry a maximum rate of 24%. The central bank also said lines of credit could be increased for credit cards and personal loans for some good debtors from August through December.
A back-up plan to support debtors
The Bank of Thailand is also unveiling a relief plan to help debtors ravaged by the Covid-19 pandemic. Days before the expiration of the three-month comprehensive debt leave. The package includes reduced interest rates for credit cards, personal loans, and home and hire purchase loans.
Under the new program, the Bank of Thailand is forcing credit card operators to cut rates by two percentage points, from 18% to 16%. Credit card debtors will only be subject to a 12% rate if they convert their debt into a term loan.
The rate of debit cards will be lowered from 28% to 26%, while the interest rate for personal loans will be lowered to 25% in commercial banks and to 22% in specialized financial institutions and non-bank companies.
The central bank caps the rate on personal loans at 28%.
The interest rate on auto securities lending will drop from 28% to 24%, and the lease-purchase rate will be reduced by one percentage point.
For mortgages, the central bank will require lenders to grant three-month debt leave. Also debt restructuring to reduce monthly payments and reschedule payment plans.
Source: Bangkok Post, Bloomberg