Bank of Thailand Governor Veerathai Santiprabhob revealed measures to support entrepreneurs through low-interest loans or 500 billion baht soft loans for customers in the SMEs sector on Tuesday.
As the situation is undergoing a recovery state, the BOT is preparing to propose a soft loan extension to the government which will prolong the duration from 2020 until 2021.
The BOT will also permit the Thai Credit Guarantee Corporation (TCG) to help guarantee longer credit for entrepreneurs.
Allowing the TCG to participate would benefit customers and would make the measure more interesting as the government will compensate the credit loss only for the first two years, according to the old royal decree on soft loans.
Currently, more than 100 billion baht of soft loans have been issued. Around 63,000 people have been approved for soft loans with an average of 1.6 million baht per person.
Veerathai said that the Thai economy will gradually recover to a pre-COVID-19 state in about two years, adding that the journey will be “a long-check mark recovery.”
The weakening Thai baht is a result of uncertainty both at home and abroad, coupled with the aftermath of COVID-19 pandemic, said Veerathai.
There will be more volatility in the financial market and related foreign markets due to extra liquidity provided by the central banks of key industrialized countries.
Veerathai said he has no worry about capital outflows even though the tourism sector and exports businesses are severely affected by the coronavirus situation.
He added that with the low-interest rate and the high liquidity in the banking system, Thailand would not rely on foreign debt.
The SME sector has been one of the biggest concerns for the financial sector as it has been reporting higher loan loss provisions for their second-quarter earnings. This has prompted them to report lower earnings.
The SME sector, which accounts for nearly 40 per cent of the overall lending portfolio of the financial sector in Thailand, has been one of the most severely impacted sectors amid the onset of the Coronavirus.
The anxiety of loans going sour in the SMEs sector has been a big issue.
Chief executives of smaller and medium-sized banks have privately said that they are very worried about the rising non-performing loans in the SME sector.
Recently, two CEOs of mid-size banks in Thailand have admitted that they fear the SME sector would start to show higher NPLs after the six-month grace period is over in October 2020.
