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Published on September 5, 2007

The Bank of Thailand (BOT) will issue a policy statement on debt collection for credit cards and personal loans after a number of debtors complained about aggressive approaches by debt-collecting companies.

The central bank, however, has not changed the maximum interest rate, fees and the minimum monthly repayment of 10 per cent of outstanding loans.

Tongurai Limpiti, the BOT's senior director, said the statement would set a standard for debt collection for commercial banks, non-bank institutions and outsource companies.

For example, while creditors are required to ask for payment during a certain period, they are prohibited from threatening debtors. "We must take action to protect debtors who are vexed. It will not cause a significant negative impact, but will help to improve the situation," said Krirk Vanikkul, the central bank's assistant governor.

The policy statement is likely to be introduced next week, after BOT Governor Tarisa Watanagase gives her approval.

Earlier, the BOT asked credit-card issuers and loan companies to follow guidelines about advertisements and inducements seeking to persuade people to take on cards or loans.

Debtors had asked the BOT to cut the interest-rate ceiling for credit cards from 20 per cent and reduce the minimum monthly repayment from 10 per cent to 5 per cent of outstanding loans.

Tongurai said the BOT had kept the rate ceiling at 20 per cent, although market interest rates had earlier increased aggressively. Operating costs of banks and non-bank companies remain high and market interest rates have not declined much.

The card-issuers would go out of business if they were unable to make a profit under strict regulations, she said.

"Earlier, interest rates had risen but we did not raise the ceiling for companies. However, we have been monitoring the market, so as to react on it properly," she added.

The central bank believes the minimum debt repayment of 10 per cent encourages discipline among debtors. They had three years to adjust their behaviour to the tightened measure before it was implemented, Tongurai said.

Anoma Srisukkasem

 The Nation