Praut asks Bank of Thailand to lower rates on credit cards, loans

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A woman walks out of Siam Commercial Bank in Bangkok on April 18, 2016 (photo from Reuters archive)

A woman walks out of the Siam Commercial Bank in Bangkok on April 18, 2016 (photo from Reuters archive)

The government has asked the central bank to revise interest rates on credit cards and personal loans to try to tackle high household debt, the prime minister said on Tuesday, causing bank stocks to fall.

General Prayut Chan-o-cha said a number of measures prepared to address debt problems include reducing the burden of interest rates on the population, adjusting debt repayment and promoting competition for lower interest rates.

The Bank of Thailand (BoT) has been asked to revise the interest rate ceiling and monitor credit cards, personal loans and car loans, he said.

“If our people still have a lot of debt at a young age, it will affect their entire lives,” General Prayut said at a briefing after the cabinet meeting.

Household debt stood at 14 trillion baht at the end of December, equivalent to 89.3% of gross domestic product (GDP), one of the highest in Asia.

As a result of this move, banks’ shares fell 1.2% in early afternoon trading, Kasikornbank fell 2.3% and Siam Commercial Bank shares fell 1.9%. Analysts believe that the rate cut will have a negative impact on banks’ earnings.

Last year, BoT lowered the interest rate ceiling for credit cards from 18% to 16% per year and for personal loans from 28% from 24% to 25% to help debtors cope with the fallout from the coronavirus outbreaks.

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