Debt relief initiative to have ‘marginal impact’ on non-bank lenders

Fitch Ratings has concluded that the Thai government’s expanded debt-relief measures, aimed at assisting vulnerable retail borrowers and announced on February 11, will exert a negligible influence on the financial performance and credit profiles of non-bank financial institutions (NBFIs). 

The Friday statement concluded that the limited scope and existing offsets of the measures would effectively mitigate any potential impact.

The debt relief programme, initially unveiled in December 2024 to support clients of banks and their subsidiaries, now has been extended to encompass non-bank-owned NBFIs. 

As previously reported in Fitch Wire on December 19. 2024, the initiative has thus far garnered participation from Muangthai Capital Pcl (BB/A-(tha)/Stable) and AEON Thana Sinsap (Thailand) Pcl (A-(tha)/Stable), with further entrants anticipated.

Under the programme, NBFIs will receive subsidised funding via a soft loan from the state-owned Government Savings Bank (GSB) at an interest rate of 0.01%, contrasting with the deposit levy reduction provided to banks and their subsidiaries. 

However, the GSB loan is subject to a cap of 5 billion baht per lender and a total limit of 50 billion baht, thereby constraining the overall impact of the measures.

Fitch anticipates that the programme’s eligibility criteria will limit client uptake among NBFIs, mirroring the experience observed with bank clients. Eligible borrowers must have been clients prior to 2024 and have fallen into delinquency by October 31, 2024. 

_{Images are for reference only.Images and contents gathered automatic from google or 3rd party sources.All rights on the images and contents are with their legal original owners.}