Thailand
Thailand: Bankers seek easing of soft loan regulations
The Thai Bankers’ Association (TBA) has asked for an easing of the government’s amendment of the soft loan decree, which was aimed at facilitating better access to funding for small and medium-sized enterprises (SMEs).
The TBA submitted its proposal regarding the soft loan decree amendment and the asset warehousing model to the Bank of Thailand, which is working with the Finance Ministry to determine additional financial assistance measures for struggling SMEs and a tourism sector reeling from the pandemic, said Piti Tantakasem, chief executive at TMB-Thanachart Bank, a member of the TBA.
For the new soft loan scheme, the TBA proposed regulatory bodies ease three core conditions. It called for a longer loan maturity compared with the two-year duration embedded in the existing programme, while seeking a higher additional credit line offered to SMEs than the current ceiling rate of 20%.
The TBA also proposed a higher credit guarantee than the regular threshold of 30% guaranteed by the Thai Credit Guarantee Corporation.
Effective since April 2020, the 500-billion-baht soft loan decree has underperformed, with the disbursement rate falling below expectations.
Some 126 billion baht worth of soft loans have been disbursed to 74,800 SMEs as of Feb 8, according to central bank data. The average loan approval sum stood at 1.7 million baht per business.
The central bank is offering 500 billion baht in soft loans at 0.01% interest to financial institutions for two years to relend to SMEs, with a maximum credit line of 500 million baht at 2% interest.
The soft loan programme also allows a grace period for interest payment during the first two years and waives fees for loan applications.
Mr Piti said the TBA has proposed separating the new financial assistance programmes based on different objectives. The soft loan scheme and the asset warehousing programme should differ in loan conditions based on different financial objectives, with different interest rates applied.
“SME businesses have been paying more attention to funding accessibility and sufficient liquidity rather than pricing,” he said.
The TBA expects financial authorities will finalise the additional financial assistance measures and implement them within the next two months.
The TBA completed the asset warehousing programme framework after talks with commercial bank members. Under the programme, a commercial bank would manage its own debt collateral assets, said Payong Srivanich, chairman of the TBA.
Source: https://www.bangkokpost.com/business/2082895/bankers-seek-easing-of-soft-loan-regulations