NESDC warned still crisis of household debt

Chatrudee Theparat

NESDC warned still crisis of household debt

The National Economic and Social Economic Council (NESDC) warned household debt still is a high risk to the Thai economy.

Mr. Danucha Pichayanan, secretary general to NESDC said household debt is likely to have more pressure to the Thai economy. According to the credit bureau data, it was found that there remains many debts outside the National Credit Bureau (NCB) system, causing creditors unable to verify the debt status and net income after deducting debt obligations. This may lead to borrowing beyond the ability to repay.

Prioritization is needed to mitigate NPL issue, particularly from non-bank lenders. The share of NPL to total loans of NCB in 2022 was at 7.6 %, while the number was only 2.6 % for NPL caused by commercial banks (banks), almost 3 times less than the overall number. This implied the debt problem caused from lenders other than commercial banks.

Borrowers with special attention needed are the early working age and the elderly. The early working age group or the Gen Y group had spending behaviors with the concept of "It's a must-have item,". Meanwhile, the elderly group has higher NPL growth compared to the other groups, partly
due to low financial skills. This reflects the diversity in ages and debt-incurring which require different solutions.

Other unclassifiable household debt, which might need precedence. In 2022, the figure of other debts accounted for more than 18.8 % of total debt, and the second highest NPL ratio to total loans of which almost 2 million are NPL borrowers. 

Many households faced liquidity shortage, while some tend to incur more debt.

According to the NCB data in the first quarter of 2023, the value of household debt was 12.9 trillion baht and there were approximately 83.1 million credit accounts. In terms of debt incurring and debt repayment classified by age group, the working age under 50 years old had continually increasing debt during the COVID-19.

Most of which were housing purchase which translate to larger amount of loan.

In terms of debt repayment pattern, people with age under 30 years has higher NPL after the COVID-19. The number of NPL in 2022 was higher than 2019, despite several supporting measures from the government. This reflects the vulnerability of debtors whose income may not fully recover.