The central bank's October inflation report showed low-income earners were increasingly behind in their debt repayments.

Households with monthly incomes of under Bt5,000 made up 9 per cent of personal-loan bad debts, that is those that had not been serviced for three months or more. This was a slight increase on June.

The Bt5,000-Bt10,000 income bracket was also getting behind in its debt-servicing, as were those earning Bt10,000 to Bt15,000, although the bank gave no details.

Nevertheless, there was a general decline in bad loans in the Bt10,000-plus groups. There were only small changes in other brackets' debt-servicing capabilities.

Low-income earners with debt not serviced for fewer than three months were not classified as non-performing. They were noted as "special-mention" loans.

The report "indicated the household sector tried to maintain its trustworthiness, and non-bank companies wanted to keep non-performing loans to a minimum".

In the second quarter this year non-performing personal loans comprised 4 per cent of total loans, compared with 7.2 per cent of mortgages and 2.8 per cent of credit-card loans. Total housing loans declined as consumer loans and car hire-purchase lending accelerated.

The bank's Monetary Policy Committee expressed concern. It noted low-income households had many expenses and few savings.

Yet it was optimistic their financial status would improve due to the stable cost of living. Rising interest rates would benefit savers.

"It also depends on how cautious the household sector is in its borrowing for consumption," said the report.

Bank Governor-designate Tarisa Watanagase said it was trying to keep household debt on track. If it got out of hand it could mean a "double financial problem", she said, and the country needed savings to serve investment growth.

She said positive real interest rates could boost household savings and the sufficiency-economy philosophy could curb household debt.

Anoma Srisukkasem

The Nation