Thailand: FPO says household debt level not yet worrisome

  • The Fiscal Policy Office (FPO) has rushed to soothe jitters, saying Thailand’s household debt, which reached the highest level since 1Q17, is not worrisome yet as most of the leverage is backed by collateral.
  • Of the total family debt load, 42.8% was borrowed from commercial banks, 28.4% from specialised financial institutions and the remainder from non-bank institutions, said Lavaron Sangsnit, director-general of the FPO.
  • Half of the debt owed to commercial banks and specialised financial institutions was mortgages and auto loans that are asset-backed debt, while another 16.4% was loans for business operation, he said.
  • However, the Finance Ministry’s think tank will closely monitor the issue and teach people about financial literacy, said Mr Lavaron.
  • In a related development, Predee Daochai, chairman of the Thai Bankers’ Association, said commercial banks are still sticking to capping the debt-to-service ratio (DSR) at 40%, though the Bank of Thailand has held off on implementing a standardised DSR calculation until 2020.
  • Typically, the DSR of a borrower should not exceed 40% of total monthly income.

External Link : https://www.bangkokpost.com/business/1743159/fpo-says-household-debt-level-not-yet-worrisome

5-Sep-2019


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