The Bank of Thailand recently revealed details on the improvements of calculation methods for interests and service charges, with the aim of protecting consumers in three areas. These include: 1) prepayment penalties for SME and personal loans; 2) default interests that must be based on outstanding installment of the principal only; and 3) debit and ATM card fees, wherein banks must repay such fees back to cardholders if their cards have been cancelled.
We at KResearch view that such improvements will create clearer practices and standards among commercial banks, with the focus placed more on consumer benefits while the impact on commercial banks may not exceed 2 percent of their annual net profit. The new calculation method for default interests may hurt their net profit the most.
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