State banks secure funds to support business

ECONOMY

Economic ministers have approved an 8-billion-baht recapitalisation plan to strengthen two state banks to help them support business lending and revive the battered economy.

Korn: Banks will be able to lend more

The funds will be raised for the Export and Import Bank of Thailand and the Small Business Credit Guarantee Corp (SBCG).

Prime Minister Abhisit Vejjajiva, who chaired the meeting yesterday, said the recapitalisations would help raise SBCG's capacity to extend loans to small and medium-sized enterprises and for the Exim Bank to do the same for exporters.

The SBCG would increase its registered capital by 3 billion baht, while the Exim Bank would boost capital by 5 billion baht.

Finance Minister Korn Chatikavanij said the Exim Bank would then be able to provide export guarantees worth from 100 billion to 150 billion baht a year, or as much as 450 billion baht over three years.

Although it would take a while to restore the confidence of overseas buyers who may be suffering liquidity problems, there was still an enormous need for the guarantee, which requires the Exim Bank to compensate exporters who fail to receive payments from buyers, he said.

The scheme will cover all kinds of export products, particularly those destined for new markets.

The SBCG's new capital would help support credit guarantees for small businesses worth up to 30 billion baht for borrowing of up to 100 billion baht.

Mr Korn said the recapitalisation plans would encourage commercial banks to lend more to support weakened industries and, as a result, factories might not have to lay off workers.

The government would pay compensation if any damage was incurred to the two state banks following the recapitalisations, he said.

In a separate development, the Commerce Ministry yesterday initiated the Rainbow Project in partnership with the private sector and state banks to help the jobless open their own businesses.

The project includes soft loans worth up to 5 billion baht to be offered by the Government Savings Bank, SME Bank and Krung Thai Bank. It is designed to help jobless new graduates and the general public who are financially affected by economic hardship.

Under the Rainbow Project, the Business Development Department will support training and cooperate with state banks to offer credit lines to those who want to run their own businesses, including franchise, e-commerce, direct sales, direct marketing, green, modern trade and community and tourism-related businesses.

The Rainbow Project will run for three months and is expected to create about 100,000 jobs and more than 2,000 new entrepreneurs.