BOT long-term management of Thai credit card debt (18-06-07)
Bangkok Post Article June 18, 2007
Credit card debt under control
Credit card spending and outstanding debt slowed but remained healthy in April, said the Bank of Thailand.The volume of card usage rose 19% year-on-year to 68 billion transactions in April, compared with 21% year-on-year growth to 57 billion baht in the same period last year. Outstanding loans grew 15% year-on-year to 170 billion, compared with 20% year-on-year growth to 147 billion baht in 2006.
The Bank for International Settlements said in its latest report that Asia's rapidly growing credit card business could prove dangerous due to its short cycle, although it added that Thailand's card market was developing at a more manageable pace than in some other countries.
Tarisa Watanagase, the Bank of Thailand governor, said that credit card lending had slowed with outstanding loans at just 2-3% of total outstanding debt.
"The central bank prepared a long time ago to cushion the effects of credit card growth on the economy, by issuing regulatory measures," she said.
The central bank set the minimum salary for credit card applicants at 15,000 baht per month, from 10,000 baht in 2002, and raised the monthly installment to 10% of the outstanding balance from 5% in March 2004.
Kasikorn Research Center expected outstanding credit to rise following the central bank's increase in monthly instalments and interest rates from 18% to 20%, which would affect the repayment ability of some debtors. It said the decline in outstanding credit cards was in line with the banking system, which recorded 0.26% growth of net loans after provisions, totalling 13 billion baht in April.
