The Bank of Thailand's Monetary Policy Committee is keeping a close watch on household debts as consumer borrowing continues to rise, despite a series of interest-rate hikes.

The increased borrowing might adversely affect borrowers' debt-servicing capability, according to the quarterly report issued late last month by the central bank.

Consumer loans at commercial banks' grew 16.7 per cent in the fourth quarter of 2005, according to the BOT. Low-income borrowers made up the biggest sector of loan recipients.

Credit-card loans have continued to increase as well, albeit at slower pace.  In addition, the number of personal loans has risen, and again the largest proportion of borrowers had incomes of less than Bt15,000 per month.

The report stated that on average, households that had taken out personal loans on an income of less than Bt5,000 per month were now saddled with debts of more than twice their monthly income.

That's opposed to higher-income borrowers who have personal loans or outstanding debts closer to their income levels.

The central bank in July 2006 will take for responsibility for supervising non-bank companies that issue personal loans.

Dampened by higher interest rates, mortgage loan growth has increased more slowly.

Recent increases in the banks' minimum lending rates have already resulted in amendments to loan contracts in terms of the number of monthly instalments and their repayment periods.

"The [contract] amendments will force retail borrowers' to adjust their lifestyles," the report said.

The monetary committee said that it would continue to monitor the ability of consumers to service their debts but the number of non-performing loans in the fourth quarter last year did not indicate any cause for concern yet.

The total of new bad loans has continued to fall, mainly due to a sharp decline in housing loan defaults. However, the number of credit card defaults has fallen much more slowly.