Parliament has approved an emergency decree to amend the Civil and Commercial Code to reduce the interest rate charged for loan defaults which has been used for almost a century.
Finance Minister Arkhom Termpittayapaisith said the law would be amended during the prolonged Covid-19 pandemic to help debtors who are having to pay interest as high as 7.5% per annum.
The average current savings interest rate in the country is just 0.5% per annum.
Under the current law, the interest rate for loan defaults, where no rate is specified in a contract, is 7.5%.
The amendment bill cuts the rate in contracts in the event no rate is specified to 3%, and the rate for defaults to 5%. It is not known how many stand to benefit.
Under the law, some creditors took advantage of their debtors by charging excess interest, putting them in even more in debt, said the minister.
Amending the law to cut the statutory interest rate was of utmost urgency to help debtors, particularly SMEs seriously affected by Covid-19, he said.
Mr Arkhom said in March that the Civil and Criminal Code had been in place for 95 years and the 7.5% statutory rate should be changed in response to the prevailing economic conditions.