The government has asked the central bank to review interest rates for credit cards and personal loans to try to tackle high household debt, the prime minister said on Tuesday, sending bank shares falling.
Gen Prayut Chan-o-cha said a range of measures prepared for solving debt problems include reducing peoples’ interest rate burden, debt repayment adjustments and promoting competition for lower interest rates.
The Bank of Thailand (BoT) has been asked to review the ceiling of interest rates and supervise credit cards, personal loans and auto title loans, he said.
“If our people still have a lot of debt and at a young age, it will affect their whole lives,” Gen Prayut told a briefing after a cabinet meeting.
The country’s household debt stood at 14 trillion baht at the end of December, equal to 89.3% of gross domestic product (GDP), among the highest in Asia.
The move sent bank shares falling 1.2% in early afternoon trade, with Kasikornbank down 2.3% and Siam Commercial Bank slipping 1.9%. Analysts said lower rates will hurt banks’ earnings.
Last year, the BoT reduced the interest rate ceiling for credit cards to 16% per year from 18% and that of personal loans to 24% to 25% from 28%, to help debtors cope with the impact of coronavirus outbreaks.