BoT urges faster approval of soft loans

Several shops at the Chatuchak weekend market are closed following the third wave of Covid-19 outbreak. Loans under the scheme are aimed at supporting the liquidity of SMEs who have been impacted by the pandemic. (Photo by Apichit Jinakul)
Several shops at the Chatuchak weekend market are closed following the third wave of Covid-19 outbreak. Loans under the scheme are aimed at supporting the liquidity of SMEs who have been impacted by the pandemic. (Photo by Apichit Jinakul)

The Bank of Thailand (BoT) has urged financial institutions to speed up soft loans to small and medium-sized enterprises (SMEs) after loan approvals have been lower than its target.

The BoT on Monday disclosed that soft loan approvals under the BoT’s amended-soft loan scheme had already reached 16 billion baht, which is still lower than the central bank’s projection for the first phase.

The loans are aimed at supporting the liquidity of SMEs that have been impacted by the Covid-19 outbreak. The BoT set aside a total of 250 billion baht in the amended soft loan scheme, however, it declined to specify the target of the loan approval in the first phase.

Ronadol Numnonda, the BoT’s deputy governor for financial institutions stability, said the lower-than-expected rate of loan approval was partly due to the impact of the third wave, which has made it difficult for financial institutions to work with the flow in the loan granting process.

The readiness of banks’ internal operations and their staff is another key factor delaying the soft loan approval.

“Financial institutions need to improve internal operations of processes and people to speed up soft loan offerings in order to help SMEs amid the difficult situation. As well, the banks need to work proactively after the soft loan scheme has been implemented for some weeks,” he said.

The BoT held a meeting with financial institutions on Monday to discuss how to improve and speed up the soft loan process.

The central bank implemented the amended soft loan scheme on April 26 this year. As of May 17, the central bank had granted 11.54 billion baht to 5,465 business operators accounting for around 2.1 million baht per borrower.

Around 63% of the soft loan borrowers were micro-SMEs whose credit line is no more than 5 million baht each, followed by 32.6% SMEs whose credit line is 5-50 million baht per borrower, and 4.4% corporate firms whose credit line is 50-500 million baht.

Mr Ronadol said it was quite a small ticket size of the average credit line being granted to a borrower at 2.1 million baht, showing that small-sized businesses can access soft loans, in particular, the commerce and retail industries.

As well, he said there are four commercial borrowers participating in debt restructuring through an asset warehousing scheme worth 910 million baht in terms of transferred assets for debt payment. Asset warehousing is a new debt restructuring instrument in which both borrowers and creditors need more time to discuss asset transfer conditions.

There are many commercial borrowers paying interest to join the asset warehousing scheme so the number of borrowers applying for the programme will further increase.

Article source: https://www.bangkokpost.com/business/2121083/bot-urges-faster-approval-of-soft-loans