GSB plans debt moratorium for 630,000 debtors amid Covid-19 pandemic
The Government Savings Bank (GSB) is setting up a plan to provide a debt moratorium for 630,000 debtors, totalling 6.3 billion baht. This plan is in response to the economic hardship experienced by individuals and businesses due to the Covid-19 pandemic, according to an anonymous source.
During the pandemic, between 2020 and 2021, GSB, a state-owned entity, issued loans totalling 20 billion baht to low-income borrowers as part of the government’s effort to alleviate public debt. This was a major milestone in the government’s debt relief initiatives, as it offered customers the opportunity to borrow up to 10,000 baht with a monthly interest rate of 0.35%, along with a six-month grace period for principal and interest payments.
On December 19, last year, the Cabinet approved GSB’s proposal to aid debtors affected by Covid if a debtor is in ongoing financial hardship, GSB has the authority to utilise a government-allocated budget to compensate for non-performing loans (NPLs). This action allows these NPLs to be eradicated, and the debtors to be removed from the National Credit Bureau’s bad debtor list, from January 6 to 31.
The source mentioned that this measure, which will only be offered once to maintain financial discipline, is predicted to assist about 630,000 debtors. This figure is significant given that, out of the 22.6 million households in Thailand, nearly 80% or 17.8 million are low-income earners, and 51% or 9 million are in debt, according to GSB data.
In 2021, 7% of indebted households turned to the informal sector for loans, facing annual interest rates of up to 120%. Meanwhile, 32% utilised formal loans from specialised financial institutions, and the remaining 61% borrowed from various other sources.
Between 2020 and June 2023, 3.2 million GSB customers with low or inadequate credit accessed credit from the formal financial sector. During this period, GSB also provided debt restructuring to 4.6 million customers.
GSB has successfully restructured 170 billion baht worth of debt by reducing interest rates and monthly instalments. Consequently, 79% of customers who entered the debt restructuring programme have been able to regain their status as a regular debtor, reported Bangkok Post.
