Finance Ministry, BOT advance AMC plan to tackle household debt and NPLs

Finance Ministry Permanent Secretary Lavaron Sangsnit has announced progress in efforts to address Thailand’s household debt and non-performing loans (NPLs), revealing that the ministry and the Bank of Thailand (BOT) have reached a clear direction for the initiative. 

The plan will involve the use of asset management companies (AMCs) to take over bad debts from banks for restructuring.

Relevant regulations are now being amended, including provisions to extend coverage to bad debts from non-bank lenders, which are currently excluded by law. 

Lavaron said the debt threshold for eligibility is still under consideration, with results expected soon.

The model will allow each commercial bank to set up its own AMC, rather than establishing a new national AMC, a decision made to accelerate implementation. 

Setting up a new central entity could take up to a year, whereas bank-run AMCs can be launched far more quickly.

Lavaron noted that Thai commercial banks, through the Thai Bankers’ Association, have long expressed interest in creating their own AMCs, and the BOT supports the move. Previous regulatory restrictions had prevented such initiatives.

The main goal, he stressed, is to reduce household debt and NPLs, enabling banks to improve their balance sheets and increase lending capacity, a vital mechanism for sustaining economic activity.

“The next step is to amend the rules without passing new legislation, allowing faster implementation. Commercial banks will have an incentive as they can transfer NPLs to their AMCs. We will expedite submission to the Cabinet for acknowledgement, as this is a priority policy,” Lavaron said.

For state-owned banks, small commercial banks, and state lenders unable to establish their own AMCs, the ministry will rely on Ari Asset Management Co (ARI-AMC), a joint venture with Bangkok Commercial Asset Management Plc (BAM) and Government Savings Bank, to absorb and manage these debts.