BANGKOK: Thailand’s central bank is debating a reduction in interest rates for some consumer loans amid fears that lenders will reject high-risk borrowers and drive them towards loan sharks, an assistant governor said Wednesday.

Last month, Prime Minister Prayuth Chan-ocha asked the Bank of Thailand (BOT) to review the ceiling of interest rates for credit cards and personal loans to help debtors and tackle high household debt, a move which has added to pressure on banks.

“We are still considering whether we will reduce (rates) or not. We have to look at the pros and cons,” Assistant Governor Thanyanit Niyomkarn told a briefing.

If interest rates are lowered, high-risk debtors who already pay the highest interest rates will be pushed out of the financial system towards loan sharks who lend at extremely high rates, she said.

Last year, the BOT cut the rate ceiling for credit cards to 16per cent per year from 18per cent and that of personal loans to 24per cent-25per cent from 28per cent, to help debtors cope with a COVID-19 outbreak.

This quarter, the BOT expects to announce rules on bank fees that will be fair and better reflect the actual costs incurred by lenders, Thanyanit added.

(Reporting by Satawasin Staporncharnchai; Writing by Orathai Sriring; Editing by James Pearson)

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