The Bank of Thailand extends the debt moratorium on SME business debtors until the end of the year 64 after it is due in June. Ready to accelerate financial institutions to restructure their debts proactively in accordance with the debtor’s ability to approve the payment of interim dividends. but must not exceed 50% of the net profit in the first half of the year It states that it is reviewing the FIDF remittance rate from the current 0.23%.
On June 10, 2021, Mr. Sethaput Suthiwatanaruput, Governor of the Bank of Thailand (BOT), revealed that since the beginning of 2020, the outbreak of the novel coronavirus disease 2019 or COVID-19 has affected Severe impact on businesses and the public, the BOT has issued various financial measures to help those affected in accordance with the nature of the problem. Including creating a mechanism for financial institutions (FOR) to be able to pass assistance to debtors Under more uncertain circumstances, such as improvements in asset classification and provisioning guidelines and reduce the financial cost of the FIDF by reducing the rate of remittance to the Financial Institutions Development Fund (FIDF), etc.
Due to the new wave of COVID-19 outbreak situation, it aggravated the economic recovery and debtor’s ability to repay while the debtor’s system remained stable. with the reserve fund level Due to the continued high liquidity, the BOT has reviewed its policy in passing additional assistance to affected debtors. and urged the Federal Reserve to expedite debt restructuring by taking into account the potential and opportunity for debtor adjustment in the future. while maintaining the stability and good risk management of the SAO with details as follows:
1. Extending debt deferral measures for SMEs debtors due on June 30, 2021, until the end of 2021 for groups that are severely affected by the new wave of outbreaks, such as businesses that are not yet open for business As usual, the Ministry of Finance is unable to assess cash flows for debt restructuring. This measure is therefore not a widespread deferral of debt. It also extends the scope to SMEs debtors that are affected according to the definition currently used by each financial institution. This will cover more than SMEs with a limit of no more than 100 million baht, resulting in more debtors who are eligible for assistance. It is also in line with the Bank’s credit operations process, there is no need to adjust the work system for sending assistance to debtors. Increasing the speed of operations, whereby the SFI can maintain the original debt classification until December 31, 2021, and in the meantime, the SFI will take care of the debtor in order to expedite the debt restructuring method as soon as possible.
2. Determine mechanisms to induce debt restructuring for affected debtors by considering (1) debt repayment ability and (2) debt repayment period. The Bank of Thailand will maintain flexibility in enforcing rules on classification and provisioning if the Bank provides additional assistance to debtors in addition to the extension of the period. Only debt repayments, such as reducing principal and/or accrued interest. interest rate cut Changing the loan structure from short-term loans to long-term loans including debt restructuring with additional credit to heal and rehabilitate debtors
3. Encourage the BOI to pay interim dividends not exceeding the Dividend Payout Ratio of each HWB in 2020 and not more than 50 percent of the first half of the year 2021 net profit, including refrain from repurchasing shares. and do not redeem or repurchase capital instruments before maturity unless there is a replacement plan To maintain preventive measures to maintain the security of the SAO system to cope with uncertainty situations. This will enable the HPO to be able to continuously issue credits to support economic activities. And it is in line with the guidelines of most international regulators such as South Korea, Singapore and some European countries. The Bank of Thailand will still assess the epidemic situation and the economic recovery trend. as well as closely following up on the progress of helping debtors of each government agency to be used for consideration on the determination of the dividend payment policy for the year 2021 during the 4th quarter
As for the reduction of the FIDF’s remittance rate to 0.23% from 0.46 percent per annum until the end of 2021, the BOT is considering the necessity of extending the term. taking into account the transmission to help the debtor is important
The Bank of Thailand views that the implementation of the above measures will benefit many sectors. especially affected debtors in order to receive appropriate, prompt and timely assistance. In addition, the Bank of Thailand will accelerate other measures to increase liquidity. under the loan rehabilitation measures that adjust conditions for affected businesses to have access to more credit ready to restructure the existing debt to alleviate the burden of business operators and the public through various measures, including delaying payment For retail debtors and SMEs whose income has been interrupted Debt Settlement Program for business debtors that need time to recover Measures to assist retail debtors, phase 3 and the organization of a debt mediation expo. The BOT will closely monitor the progress and effectiveness of the measures and is ready to consider additional actions if necessary in the next phase.