NPL continues to increase. For Thai banks, the ratio of NPL in total lending
increased from 29.4% in the first quarter of 1998 to 51.6% in the first quarter of 1999, and the
corresponding ratios for finance companies were 43.8% and 65.5% respectively (table 6). For
the whole financial system, the ratio of NPL was about 47% at the end of the first quarter of
1999. The extent of NPL will dampen any economic recovery. The key question for 1999 is
how to turn non-performing loans into performing loans with as little disruption to production
as possible. That is to move the business sector into a state of greater solvency, just as the
country as a whole has moved into a state of greater solvency in 1998.