BoT instructs commercial banks to step up control of loan approvals to prevent bubble burst

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BANGKOK, 10 April 2013 The Bank of Thailand (BoT) has instructed commercial banks to make sure that all loans they will approve are of quality in order to prevent a bubble bust. 

BoT Governor Prasarn Trairatvorakul said on Tuesday that the central bank has begun to detect a sign of housing bubble in some areas.

Mr. Prasarn conceded that the BoT is concerned about mortgage quality, which is a key risk factor for the burst of the housing bubble.

He added that all commercial banks have been urged to make sure they are thorough in considering all loan applications and approvals.

So far, the central bank has not found any irregularity and NPLs remain under control.

The BoT chief went on to say that a consideration on the implementation of the Loan-to-Value (LTV) ratio for the purchase of the second house is now underway, while other measures may be introduced to keep Thailand safe from a bubble burst.