Bangkok: Mr. Pichai Chunhavajira, Deputy Prime Minister and Minister of Finance, has announced plans to discuss strategies with the Thai Bankers Association to address the issue of bad debt, inspired by a proposal from former Prime Minister Thaksin Shinawatra. The approach aims to leverage the 1997 model of debt resolution, which was employed following the economic crisis of that year. This model involves debt restructuring, including the negotiation of extended terms and reduced interest rates to provide relief to debtors.
According to Thai News Agency, Mr. Pichai expressed understanding of the complexities involved in managing bad debt, noting that previous efforts to restructure debt often encountered obstacles due to various conditions or multiple financial obligations faced by debtors. He emphasized the necessity of collaborating with financial institutions, as they are the primary holders of these debts. Moreover, the government, along with potential private sector involvement, might play a role in managing the debt resolution process.
Mr. Pichai highlighted the importance of distinguishing between good and bad debts, suggesting the establishment of a dedicated unit to manage the latter. He pointed out that solving the issue of bad debt would require a comprehensive examination of all available strategies and a determination of the best path forward. He indicated that discussions with the Thai Bankers Association would help in exploring these options and understanding the implications, including whether a budget would be necessary for this initiative.
The focus remains solely on non-performing loans (NPLs) or bad debts, as Mr. Pichai clarified that good debts would not be part of this resolution process. When questioned about the scale of the current debt situation, he estimated it to be around a thousand million baht but noted that further details would be needed to categorize the debt types, such as home, car, or personal loans. This initiative marks a proactive effort by the government to address financial stability and provide relief to affected individuals by drawing on historical debt management practices.