Banks will adjust rate gradually to assist vulnerable customers, SMEs
The Thai Bankers’ Association vowed to adjust the interest rate gradually in a bid to minimise the impact on vulnerable customers and small and medium enterprises (SMEs) after the Monetary Policy Committee (MPC) decided on Wednesday to raise the policy rate by 25 basis points to 0.75 per cent.
The MPC decided on the rate rise after believing a loose monetary policy is less necessary to support the economy amid the Covid-19 crisis as the economy is likely to recover thanks to an increase in foreign visitors.
Association chairman Payong Srivanich said on Wednesday evening that banks would proceed with the rate adjustment gradually to ensure vulnerable customers and SMEs who have yet to fully recover from the impact of the pandemic and energy price crisis can continue to operate their businesses smoothly.
Banks will continue rolling out long-term debt-restructuring measures for customers to counter NPLs (non-performing loan) until the end of next year, when the economy is expected to bounce back, Payong said.
Individual customers will not be affected much by the rate adjustment as most have been granted fixed interest rates, including for hire-purchase loans, credit cards, and personal loans, he pointed out.
Meanwhile, most housing loan customers, who are on floating rates such as MLR (minimum loan rate) or MRR (minimum retail rate), already have fixed monthly payments, so the impact of a rate adjustment would be minimal, he said.
The association and member banks will monitor the situation closely and provide suitable aid to customers to prevent the NPL cliff phenomenon, or a situation where a big amount of debt defaults occur in a very short time, forming a cliff of non-performing loans, Payong said.
The association also reported that as of May 2022, customers who have applied for debt restructuring programmes due to the impact of Covid-19 have dropped to 1.6 million accounts amounting to 2 trillion baht of debts, from 6.1 million accounts or 4.2 trillion baht of debts recorded in July 2020.