bot notification no 51-2548 30-06-05 · bot notification no. 51-2548 (30-06-05) ... bank of...

BOT Notification No. 51-2548 (30-06-05) of 1

Unofficial Translation by the courtesy of The Foreign Banks' Association

This translation is for the convenience of those unfamiliar with the Thai language. Please refer to the Thai text for the official version.

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30 June 2005

To Manager All commercial banks registered in Thailand All branches of foreign commercial banks

No. PhoSorWor.21(Wor) 51/2548 Re: Dispatch of the Notification of the Bank of Thailand Re: Prescription of Rules, Procedures, and Conditions for Undertaking of Personal Loan Business under Supervision for Commercial Banks The Bank of Thailand (BOT) attaches herewith 2 Notifications of the

Bank of Thailand which come into force from 1 July 2005 onwards as follows: 1. Notification of the Bank of Thailand Re: Prescription of Rules,

Procedures, and Conditions for Undertaking of Personal Loan Business under Supervision for Commercial Banks dated 24 June 2005, which was published in the Royal Gazette, General Edition, Volume 122, Special Part 46 Ngor, dated 29 June 2005. The essences of this Notification are:

(1) Definition of personal loans under supervision; (2) Rules, procedures, and conditions for undertaking of personal loans

under supervision, for example, credit line, debt repayment and debt collection process, and establishment of business policies, plans, and public relations;

(3) Preparation of reports on personal loans under supervision in the form of excel file format specified by the Bank of Thailand, which are to be submitted via the Data Management System (DMS), with one hard copy of the reports submitted to the Ministry of Finance.

2. Notification of the Bank of Thailand Re: Interest and Service Charges

that Commercial Banks may Charge in Undertaking of Personal Loan Business under Supervision dated 24 June 2005, which was published in the Royal Gazette, General Edition, Volume 122, Special Part 46 Ngor, dated 29 June 2005. The essences of this Notification are prescription of the following issues:

(1) The maximum aggregate rate of interest, fines, service charges, any

fee that are related to personal loans under supervision to no more than 28 percent per year (effective rate);


(2) Expenses actually paid and deemed appropriate in the list prescribed specified by the Bank of Thailand at the end of the Notification;

(3) Announcement of interest, fine, service charges, any fee, and expenses actually paid and deemed appropriate.

Please be informed and comply with accordingly.

Yours sincerely,

(Mr. Samart Buranawatanachoke)

Senior Director, Financial Institutions Policy Group

For Governor

Attachment 1. Notification of the Bank of Thailand Re: Prescription of Rules, Procedures, and Conditions for Undertaking of Personal Loan Business under Supervision for Commercial Banks dated 24 June 2005

2. Notification of the Bank of Thailand Re: Interest and Service Charges that Commercial Banks may Charge in Undertaking of Personal Loan Business under Supervision dated 24 June 2005

Risk Supervision Policy and Analysis Department

Tel. 0-2283-5304, 0-2283-5837

Note [ ] The BOT will arrange a clarification meeting on ……at….

[X] No clarification meeting will be arranged


Notification of the Bank of Thailand Re: Prescription of Rules, Procedures, and Conditions for Undertaking of

Personal Loan Business under Supervision of Commercial Banks ___________________________________________________________

1. Objective of the Notification

To protect public benefits and prevent problems that may arise from personal loan business in the future, as well as to govern all personal loan business operators under the same supervisory standard.

2. Statutory Power

By virtue of the provisions of Section 22(8) of the Commercial Banking Act B.E. 2505 and the amendments thereof, the Bank of Thailand hereby issues the rules, procedures, and conditions for undertaking of personal loan business under supervision of commercial banks as prescribed in this Notification.

3. Scope of Application

This Notification shall apply to all commercial banks in accordance with the Commercial Banking Act that undertake personal loan business under supervision.

4. Contents

Definition 4.1 In this Notification, “personal loans” mean lend money, buy, discount or rediscount bills or any

negotiable instruments to a person without particular objective, or with an objective to acquire goods or services that is not for business purpose.

“personal loans under supervision” mean personal loans that do not have any asset or property pledged as collateral and, for the benefit of this Notification, include loans from hire purchase and leasing for goods that business operators do not sell as ordinary course of business, except automobiles and motorcycles.

But excluding, loans for education, loans for traveling overseas employment, loans for medical treatment, employee loans that the employer enters into a contract with commercial banks, and loans prescribed by the Bank of Thailand.

Qualification of the recipients of personal loans under supervision

4.2 Commercial banks can grant personal loans under supervision to a person only if, after consideration, commercial banks deem his or her financial status adequate for debt payment.


Setting of credit line for personal loans under supervision

4.3 Commercial banks shall give credit line for personal loans under supervision to each consumer in the amount not exceeding 5 times of an average monthly income or the monthly average of the cash flows in the consumer’s deposit account at a financial institution for at least 6 months.

Interest, fines, service charges, any fee, and expenses actually paid and deemed appropriate that are related to personal loans under supervision

4.4 In collecting interest, fines, service charges, any fee, and expenses actually paid and deemed appropriate that are related to personal loans under supervision, commercial banks shall comply with the Notification of the Bank of Thailand Re: Interest and Service Charges that Commercial Banks may Charge in Undertaking of Personal Loan Business under Supervision Business dated 24 June 2005.

Debt repayment and debt collection process

4.5 Commercial banks shall comply with the following procedures of debt repayment and debt collection process:

(1) A warning letter shall be issued to consumer at least 20 days prior to pursuing legal execution of debt payment;

(2) A statement of debt shall be sent to consumer at least 10 days prior to the payment due date or debiting date; the detailed calculation of interest or expense charged for the unpaid debt shall be shown in the statement as well.

Change of debt category

4.6 No commercial bank shall transfer debt arising from personal loans under supervision into debt under a current account or debt under other types of credit agreement, unless prior written consent is obtained from the consumer.

For debt arising from personal loans under supervision that has not yet been transferred as the debt under the current account agreement, interest shall not be compounded with the principal amount in order to charge interest on the compounded amount.

Practices and Management regarding information of consumers

4.7 Commercial banks must pay attention to and arrange to have accurate and complete consumer information to support the consideration for approval and determination of appropriate credit line, in consistent with debt repayment ability of the debtors. Such can be done by means of using information from reliable central credit source such as a credit bureau, or by jointly form information center for joint use in verifying personal records of consumer and total credit line received as well as other information.


Practice upon consumer’s complaints

4.8 Commercial banks must conduct examination when consumer files complaints that are related to personal loans under supervision and notify the progress thereof as well as subsequent processes to consumer within 7 days from the day the complaints are received. In addition, commercial banks shall rectify such complaints and notify the consumer without delay.

Establishment of business policies, plans, and public relations

4.9 Commercial banks shall establish business policies, plans, and public relations related to personal loans under supervision in the following manner:

(1) Commercial banks must set up business policies, and plans, related to personal loans under supervision and propose them to the board of directors for approval every year. Such policies and plans should comprise direction and guideline for providing personal loans under supervision services, as well as goal in providing the services to the customer in accordance with the consumer’s income level;

(2) Commercial banks must establish rules or procedures for their own officers or specify in the contract appointment of a representative to act on behalf of the commercial banks in term of seeking new consumer or contacting existing consumer to offer new types of credits, as well as comply with the following procedures;

(a) Contacting new consumer or existing consumer must be done between 8.00 am and 8.00 pm, Monday to Friday, and between 8.00 am and 6.00 pm during public holidays;

(b) In applying marketing scheme to promote personal loans under supervision, commercial banks must use the means of communication that consumer can easily understand without exaggerating, and must inform accurate and complete facts, as well as clearly specify the rate of interest, fines, service charges, any fee, and expenses actually paid for each type of personal loans under supervision.

Risk management

4.10 Commercial banks shall arrange to have the risk management system for granting of personal loans under supervision as follows”

(1) A system to evaluate qualifications of personal loans under supervision applicants for approval and determination of credit line in consistent with debt payment ability;

(2) A debt collection system that can alert when debtor starts to have problem of debt payment or is not able to repay debt as agreed, as well as debt collection strategies in various circumstances;

(3) An information technology system for management purpose to determine and review policies and plans with regarding personal loans under supervision.


Accounting and reporting

4.11 Commercial banks must prepare the reports in accordance with the forms prescribed at the end of this Notification on a monthly basis, and submit them to the Bank of Thailand within 21 days from the end of the reporting month. For the report on June-August 2005, commercial banks are able to submit these reports to the Bank of Thailand within October 21, 2005. In addition, commercial banks have to send the photocopy of such reports to the Ministry of Finance within the period as specified above.

Others

4.12 If commercial banks already grant personal loans under supervision to consumer on the effective date of this Notification, they have to reduce interest, fines, service charges, any fee, and expenses actually paid and deemed appropriate that commercial banks have already contracted with to be in accordance with Section 4.4 within 1 year from the effective date of this Notification.

5. Effective Date

This Notification shall come into force from 1 July 2005 onwards.

Announced on 24 June 2005

(M.R. Pridiyathorn Devakula)

Governor

Bank of Thailand

1. Personal loans under supervision1

unit:bahtTotal incomeof consumer no. of outstanding no. of outstanding(baht/month) accounts2 loans3 accounts loans no. of outstanding no. of outstanding no. of outstanding no. of outstanding no. of outstanding

accounts6 loans7 accounts6 loans7 accounts6 loans7 accounts6 loans7 accounts loans7

less than 5,0005,000.01-10,000.0010,000.01-15,000.0015,000.01-20,000.0020,000.01-25,000.0025,000.01-30,000.0030,000.01-50,000.0050,000.01 onwardsothers9

total

Description

1. personal loans under supervision mean personal credits that do not have any asset or any property pledged as collateral, including hire purchase and leasingfor goods that business operators do not sell as ordinary course of business, except automobiles and motorcycles. But excluding, loans for education, loans for traveling overseas employment, loans for medical treatment, employee loans that the principal employer enters into a contract with personal credit business operator, and credits prescribed by the Bank of Thailand.2. no. of accounts mean the number of accounts of personal loans under supervision, only those that have outstanding credit balance at the end of the reporting month.3. outstanding loans mean outstanding loans balance, only the principal of personal loans under supervision (after deducting accrued income) at the end of the reporting month. 4. new loans mean the amount of personal loans under supervision that increases during the reporting month, excluding the decreased amount due to debt repayment, by reporting the number of accounts and new loans.5. debtors in default of payment mean debtors of personal loans under supervision who are in default of principal or interest payment for the period of: (1) > 1 month to 3 months; (2) > 3 months to 6 months; (3) > 6 months to 12 months; and (4) > 12 months from the payment due date, whether in accordance with the terms and conditons of the contracts or the debt notifying or debt collection date, whichever date comes first, by reporting the number of accounts and outstanding credit balance, only the principal (after deducting accrued income).6. no. of accounts mean the number of accounts of personal loans under supervision that are in default of payment for the period specified in 5 at the end of the reporting month.7. outstanding loans mean outstanding balance of personal loans under supervision that are in default of payment for the period specified in 5 at the end of thereporting month. 8. write off means personal loans under supervision that are written off in the reporting month, by reporting the number of accounts and outstanding credit balance.9. others mean a group of debtors that have cash flows in the consumer's deposit account at a financial institution in a monthly average for at least 6 months.

> 12 monthsWrite off 8Total loans New loans4

> 1 month to 3 months > 3 months to 6 monthsDebtors in default of payment5

Report of personal loans under supervisionCommercial Bank …………………

As at the end of month………….year……….

> 6 months to 12 months

2. Personal loans that do not have any asset or property pledged as collateral 1

Total income Total loans New loans4 Debtors in default of payment 5

of consumer no. of outstanding no. of outstanding(baht/month) accounts2 loans3 accounts loans no. of outstanding no. of outstanding no. of outstanding no. of outstanding no. of outstanding



total

Description

1. personal loans that do not have any asset or property pledged as collateral mean loans to person without particular objective , or with an objective to acquire goods or services that is not for business perpose2. no. of accounts means the number of accounts of personal loan that do not have any asset or property pledged as collateral, only those that have outstanding loan balance at the end of the reporting month.3. outstanding loan mean outstanding credit balance, only the principal of total personal credits that do not have any asset or property pledged as collateral (after deducting accrued income) at the end of the reporting month. 4. new loans mean the amount of personal loans that do not have any asset or property pledged as collaral that increases during the reporting month, excluding the decreased amount due to debt repayment, by reporting the number of accounts and new loans.5. debtors in default of payment means debtors of personal loans that do not have any asset or property pledged as collateral who is in default of principal or interest payment for the period of: (1) > 1 month to 3 months; (2) > 3 months to 6 months; (3) > 6 months to 12 months; and (4) > 12 months from the payment due date, whether in accordance with the terms and conditons of the contracts or the debt notifying or debt collection date, whichever date comes first, by reporting the number of accounts and outstanding loan balance, only the principal (after deducting accrued income).6. no. of accounts mean the number of accounts of personal loans that do not have any asset or property pledged as collateral that are in default of payment for the period specified in 5 at the end of the reporting month.7. outstanding loans mean outstanding balance of personal loans that do not have any asset or property pledged as collateral that are in default of payment for the period specified in 5 at the end of the reporting month. 8. write off means personal loans that do not have any asset or property pledged as collateral that are written off in the reporting month, by reporting the number of accounts and outstanding loan balance.9. others mean a group of debtors that have cash flows in the consumer's deposit account at a financial institution in a monthly average for at least 6 months.

Report of personal loans under supervision Commercial Bank …………………


> 6 months to 12 months > 12 monthsWrite off 8

> 1 month to 3 months > 3 months to 6 months

3. Personal loans for hire purchase and leasing of various goods1

Total income Total loans New loans4

of consumer no. of outstanding no. of outstanding(baht/month) accounts2 loans3 accounts loans no. of outstanding no. of outstanding no. of outstanding no. of outstanding no. of outstanding



total

Description

1. personal loans for hire purchase and leasing of various goods mean hire purchase and leasing loans for goods that business operators does not sell in an ordinary course of business, except automobiles and motorcycles.2. no. of accounts means the number of accounts of personal loans for hire purchase and leasing of various goods, only those that have outstanding loanbalance at the end of the reporting month.3. outstanding loans mean outstanding loan balance, only the principal of personal credits for hire purchase and leasing of various goods (after deducting accrued income) at the end of the reporting month. 4. new loans mean the amount of personal loans for hire purchase and leasing of various goods that increases during the reporting month, excluding the decreased amount due to debt repayment, by reporting the number of accounts and new credits.5. debtors in default of payment means debtors of personal loans for hire purchase and leasing of various goods who is in default of principal or interest paymentfor the period of: (1) > 1 month to 3 months; (2) > 3 months to 6 months; (3) > 6 months to 12 months; and (4) > 12 months from the payment due date, whether in accordance with the terms and conditons of the contracts or the debt notifying or debt collection date, whichever date comes first, by reporting the number of accounts and outstanding loan balance, only the principal (after deducting accrued income).6. no. of accounts mean the number of accounts of personal loans for hire purchase and leasing of various goods that are in default of payment for the period specified in 5 at the end of the reporting month.7. outstanding loans mean outstanding balance of personal loans for hire purchase and leasing of various goods that are in default of payment for the period specified in 5 at the end of the reporting month. 8. write off means personal loans for hire purchase and leasing of various goods that are written off in the reporting month, by reporting the number of accounts and outstanding loan balance.9. others mean a group of debtors that have cash flows in the consumer's deposit account at a financial institution in a monthly average for at least 6 months.

> 12 monthsWrite off 8

> 1 month to 3 months > 3 months to 6 monthsDebtors in default of payment5

Report of personal loans under supervision Commercial Bank …………………


> 6 months to 12 months

BOT Notification No. 51-2548 (30-06-05) Page 1 of 1

Notification of the Bank of Thailand Re: Interest and Service Charges that Commercial Banks may Charge

in Conducting the Personal Loan under Supervision ___________________________________________________________

1. Objective

To promote transparency and fairness of commercial banks in conducting personal loan business, where consumer receives good services with reasonable cost that consistent with payment ability, and also is able to compare information in order to choose services from commercial banks.

2. Provision of Law

By virtue of the provisions of Section 14 of the Commercial Banking Act B.E. 2505 amended by the Commercial Banking Act (No. 2) B.E. 2522, the Bank of Thailand, with approval of the Minister of Finance, hereby prescribes the rules to be complied with by commercial banks as shown in this Notification.

3. Scope of Application

All commercial banks under the Commercial Banking Act that conduct personal loan under supervision business.

4. Contents

Definition

4.1 In this Notification “personal loan” means lending of money, buying, discounting or

rediscounting of bills or any negotiable instruments to a natural person without any specified purpose, or for the purpose of obtaining goods or services with no intention of using for his/her own business.

“personal loan under supervision” means personal credits that do not have any asset or property pledged as collateral and. For the benefit of this Notification, it includes hire purchase and leasing of goods that business operator does not sell in an ordinary course of business, except automobiles and motorcycles.

However, it excludes credits for education, overseas employment traveling, medical treatment, employee that the employer enters into a contract with commercial banks, and credits prescribed by the Bank of Thailand.

Interest, fine, service charges, any fee, and expenses actually paid and deemed appropriate that are related to personal loan under supervision

4.2 In collecting interest, fine, service charges, any fee, and expenses actually paid and deemed appropriate that are related to personal loan under supervision, commercial banks shall comply with the following procedures:


(1) commercial banks may collect interest, fine, service charges, and any fee that are related to personal loan under supervision with aggregate rate no exceeding 28 percent per year (Effective rate).

(2) In addition to the interest, fine, service charges or any fee in (1), commercial banks may collect charges for expenses actually paid and deemed appropriate in the list prescribed by the Bank of Thailand at the end of this Notification, for the following cases only:

(a) expenses that commercial banks must pay to the authorities

(b) expenses that commercial banks must pay to other persons or other entities provided that they have payment evidence that can be validated as to the types prescribed by the Bank of Thailand at the end of this Notification or other types authorized by the Bank of Thailand.

(c) expenses that increase the operating cost of the commercial banks resulting from provision of services to consumer or consumer’s default of payment as the case may be, only for the case as to the types prescribed by the Bank of Thailand at the end of this Notification and other types authorized by the Bank of Thailand.

Commercial banks must not collect charges for the same type of expenses as specified above twice.

(3) Commercial banks must not compound interest, fine, service charges or any fee in (1) and expenses actually paid and deemed appropriate in (2) to the debt outstanding in the calculation of interest and fee again.

Announcement of interest, fine, service charges, any fee, and expenses actually paid and deemed appropriate that are related to personal loan under supervision

4.3 In announcing the interest, fine, service charges, any fee, and expenses actually paid and deemed appropriate that are related to personal loan under supervision, commercial banks shall comply with the following procedures:

(1) post the announcement openly in all offices the details of the interest, fine, service charges, any fee, and expenses actually paid and deemed appropriate that are related to personal loan under supervision in the form prescribed by the Bank of Thailand at the end of this Notification, on the day that the commercial banks announces or changes such detailed information.

(2) post the details of (1) in the commercial banks’ website before the effective date of such detailed information.

(3) keep original copy of the details of (1), whether in the form of documentation, computer record, or any other forms, for at least 10 years from the effective date of such detailed information.

(4) notify the details of (1) to consumer of any person who wishes to apply for loan for his/her consideration when applying for the credits.


(5) if changes in the rate of interest, fine, service charges, any fee that are related to personal loan under supervision in accordance with Section 4.2 (1) put consumer at disadvantageous position, commercial banks shall notify consumer in writing within an appropriate time period as well.

(6) in addition to the rules mentioned before, if changes in the expenses actually paid and deemed appropriate in accordance with Section 4.2 (2) as well as conditions related to the expenses that put consumer at disadvantageous position, commercial banks shall comply with the rules, procedures, and conditions that are related to service charges and fee as prescribed by the Bank of Thailand (Notification of the Bank of Thailand Re: Rules on Consumer Services, Disclosure and Fee Collection of Commercial Banks dated 17 November 2003)

5. Effective Date

This Notification is effective from 1 July 2005 onwards.

Given on 24 June 2005

(M.R. Pridiyathorn Devakula)

Governor

Bank of Thailand

1. Interest, fine, service charges, any fee interest, fine, service charges, any fee …………%per year

Expenses actually paid and deemed appropriate

2. Expenses paid to the authorities 2.1 stamp duty ………… 2.2 ……….(if any) …………3. Expenses paid to other entities or other persons 3.1 payment fee payment by debiting from bank a/c …………baht/time payment via ATM …………baht/time

payment at bank counter …………baht/time payment via automatic …………baht/timepayment at payment service point …………baht/time telephone systempayment by check or postal order …………baht/time payment via internet …………baht/time

3.2 expense for verifying credit information …………baht/time 3.3 insufficient fund fee …………baht/time (in case of payment by debiting from account of other financial institution) 3.4 debt collection fee* …………baht/time4. Expense that increases operating cost of the commercial bank 4.1 debt collection fee* …………baht/time 4.2 check return fee (not exceeding 200 baht/time) …………baht/time 4.3 fee for issuing new card in case of loss/damage (in case of card for cash withdraw) …………baht/time 4.4 application fee for each statement report (from the second copy onwards) …………baht/time 4.5 application fee for replacing the exising PIN code …………baht/time (in case of card for cash withdraw) 4.6 application fee for transaction inspection …………baht/time

Note: *the same type of expense as in 3.4 and 4.1 cannot be collected from customer twice and can be collected in the amount actually paid and deemed appropriate.

Commercial Bank Name……………………..Details of the rate of interest, fine, service charges, any fee and expenses actually paid and deemed appropriate related to personal loan under supervision

Effective from….(date)……….

bot notification no 51-2548 30-06-05 · bot notification no. 51-2548 (30-06-05) ... bank of...

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