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February 24, 2025

Bank of Thailand Implements New Responsible Lending Regulations

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On January 31, 2025, the Bank of Thailand (BOT) announced a new Notification re: Responsible Lending, replacing a similar notification from 2023. This new notification provides updated measures to assist debtors in different circumstances and clear implementation guidelines for lenders, with the aim of resolving household debt issues.

Scope

The service providers covered by the notification include banks and nonbanks (e.g., credit card companies, asset management companies, licensed personal loan providers, and nano finance operators) that conduct lending business.

New Requirements

The notification’s core focus remains loan management throughout the lifecycle of a loan—from credit product development to legal proceedings and debt transfers to other creditors—but with further clarification and detail compared to the 2023 notification. The key revisions in the new notification are summarized below.

  • Advertising standards: The notification tightens requirements in some areas and relaxes them in others.
    • Stricter requirements: It is now clearly stipulated that the BOT oversees taglines that may encourage excessive borrowing. More examples of noncompliant statements are also added (e.g., “Elevate your lifestyle now, pay later”; “Get approved, even with credit challenges”). In addition, advertising material that contains multiple credit products should provide clear minimum and maximum interest rates, especially when there are significant differences in the interest rates of each product.
    • Relaxed requirements: The required information for some marketing activities is now reduced. For example, in marketing events with staff promoting loan products and offering free giveaways, service providers have the discretion to provide effective interest rate information in the manner they deem appropriate, and the advertisement material can display only the mandatory warning statements without providing interest rate details.
  • Encouraging customer financial discipline: The notification requires service providers to implement more elaborate and extensive tools to influence customer behavior (termed “nudging” by the BOT) at every stage of the lending cycle. This includes (1) increasing the nudging activities before loan application and during the repayment period to encourage customers to choose the appropriate loan repayment plan and a shorter lending period and to pay more than the minimum required payment per period, and (2) amending standard messages on persistent debt and debt restructuring measures to be easier to understand, mentioning conditions and the benefits of debt restructuring, and providing contact information.
  • Affordability assessments: The notification provides additional exemptions to the general affordability assessment criteria for (1) debt consolidation, refinancing, and additional loans under existing credit lines, whereby the existing or alternative repayment capability data of the customers (e.g., repayment history) can be used for the affordability assessment, and (2) debt with a family member as guarantor, whereby aggregate income of family members will be used for the affordability assessment.
  • Default management: The definition of “persistent debtors” (PDs)—which refers to personal loan debtors under the BOT’s supervision scheme, excluding title loans and digital payment loans—now includes those with over 90 days or three months of nonrepayment whose loans have minimum installment payment conditions, instead of non-NPL (nonperforming loan) debtors as stipulated in the 2023 notification. PDs will benefit from an extended repayment period of up to seven years for severe PD cases, without suspension of revolving credit. For debt restructuring, service providers must assist debtors at the account level rather than based on overall repayment ability. In this regard, the criteria for preemptive or troubled debt restructuring offerings have been amended to be better for debtors. Service providers must offer a preemptive debt restructuring option to debtors whose lapsed repayment is 90 days past due or less when signs of repayment difficulty appear, and a troubled debt restructuring option to debtors whose lapsed repayment is over 90 days past due, regardless of NPL status. Debt transfer, contract termination, and legal proceedings can only occur after offering the troubled debt restructuring option at least once.
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