BoT adds guidelines for debt consolidation

BoT adds guidelines for debt consolidation

Move aims to reduce interest burden

The Bank of Thailand (BoT) plans to implement additional guidelines for the debt consolidation program to help retail loan borrowers reduce interest rate charges.

The BoT has prepared additional debt assistance options to help borrowers ease their debt burden amid the latest protracted Covid-19 outbreak.

The central bank is expected to implement the new guidelines for the current retail loan consolidation program in October, said Chayawadee Chai-Anant, senior director of the BoT’s economic and policy department.

The central bank offers debt consolidation as an option as part of its debt restructuring program for personal loans.

Under the current concept of debt consolidation, retail loan borrowers can consolidate all consumer loan debt from many financial institutions into one bank for refinancing and can convert that debt by changing unsecured loans to short term into long term loans in order to receive lower interest rates.

As part of the additional orientations of the debt consolidation program, the central bank will set the ceiling rates for this mutualized debt, added Ms. Chayawadee.

For example, the ceiling rate for debt consolidation between personal loans and mortgages should not exceed 10% per annum.

Currently, mortgage interest rates are based on the Minimum Retail Rate (MRR) or Minimum Lending Rate (MLR) for home loans of around 6-8% per annum, while the interest rate maximum for personal loans is 25% per annum.

In addition, the central bank will require lenders to waive prepayment fees for debt consolidation.

“Debt consolidation will encourage competitive mechanisms in the market and benefit borrowers, especially in terms of lowering interest rates. Therefore, it will further help borrowers to ease the debt burden,” he said. she declared.

The central bank relaxed, adjusted and implemented additional debt relief measures for both existing debt restructuring and new loan offerings.

These will help borrowers, especially individuals and small and medium-sized businesses, to reduce their debt.

In view of the protracted epidemic, the central bank has focused on restructuring long-term debt rather than a moratorium on short-term debt.

Borrowers participating in the debt relief measures represented 5.12 million accounts, representing a total outstanding loan of 3.35 trillion baht.


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