BOT Addresses Credit Risk, Corporate Governance, and Climate Risk
The Bank of Thailand (BOT) published the guidelines addressing household debt, a circular on the governance and internal control mechanisms of financial institutions, and a policy guideline on the financial institution business operations with regard to environmental dimensions and climate change.
The debt guidelines outline four types of debt that are of concern: existing bad debts, chronic debts, new debt that increases rapidly and may become bad or chronic in the future, and debt that is not included in the household debt figure. The guidelines set out principles for solving household debt problems sustainably, which enable debtors to strengthen financial immunity, borrow money as needed, use the loan for the right purpose and pay debts with discipline. Going forward, BOT will expedite efforts to resolve debt problems sustainably according to the established guidelines. In addition, the Debt Clinic Project Supervisory Board revised its criteria to cover debtors with bad debt status on or before February 01, 2023, in such a way that new bad debts will be able to participate in the project, effective from February 20, 2023.
The circular on governance and internal control mechanisms provides an overview of principles related to corporate governance in terms of qualifications and appointment of directors, managers, persons with power of management or consultants, roles and compositions of various committees, and roles and duties of senior executives, including internal control mechanisms that enable the organization to achieve its goals according to the specified policies. The circular applies to commercial banks registered in the country, commercial banks registered abroad, credit foncier companies, and finance companies.
The policy guideline addressing environmental and climate change risks enables financial institutions to assess environmental opportunities and risks and incorporate them into their operations appropriately without creating additional risks. The policy guideline aims to help the Thai economy and financial system to transition sustainably and covers four major operational frameworks—namely, Governance, Strategy, Risk management, and Disclosure. The guideline applies to commercial banks registered in the country, commercial banks registered abroad, credit foncier companies, and finance companies.
Related Links (in Thai)
- Press Release on Sustainable Household Debt Solution
- Revised Criteria for Bad Debtors
- Circular on Governance and Internal Control Mechanisms
- Policy Guideline on Environmental and Climate Change
Keywords: Asia Pacific, Thailand, Banking, Sustainable Finance, ESG, Climate Change Risk, NPLS, Basel, Lending, Credit Risk, Governance, Environmental Risk, Disclosures, BOT
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