Thailand’s central bank requires financial institutions to justify loan rejections

BANGKOK, Jan 22 (TNA) – Bank of Thailand (BoT) Assistant Governor Pimpa Thawarayut on Thursday revealed that the central bank has issued letters of instruction to managers of all financial institutions, requiring them to make clear explanations in case they disapprove or reject loan applications.

Reasonable explanations must be given, she said, noting that in the past the central bank and the center tasked with liaising on addressing loan granting problems had received complaints from intending borrowers that they received unclear explanations from financial institutions over why they were refused loans.

A Bank of Thailand survey also found guidelines for approving loans vary widely among financial institutions, resulting in public confusion. More importantly, the failure to clearly explain loan rejections might lead to a negative image of such institutions as a whole.

Because of this, the BoT established guidelines to ensure uniform standards and practices to boost public understanding.  Also, it could help provide unsuccessful loan applicants with useful information on how to improve their financial position.

“We have sought cooperation from financial institutions to explain to intending borrowers why they rejected their loan applications in writing. To comply with official rules, financial institutions must give rejected loan applicants easy access to the reasons and written clarification over their failure to receive a loan approval,” she said. (TNA)