The Government Savings Bank (GSB) plans to lead Southeast Asian microfinance by turning border branches into full-service banks to serve increased trade after the Asean Economic Community (AEC) is formed.

Previously, the bank had been planning to expand its microfinance service coverage nationwide, but now that it has seen microfinance as its strength, the leading position has become its goal.

Tachapol Kanjanakul, a first senior executive vice-president, said it has been conducting a feasibility study on microfinance expansion and appropriate products.

To achieve its goal, GSB will offer new microfinance products that cover a full range of needs in the segment such as insurance, savings, investment and credit.

These products are aimed at low-income people in rural areas whose access to mainstream financial institutions is limited, while GSB has become the major grass-roots financial service for more than a decade, said Dr Tachapol.

It has also successfully operated with a low non-performing loan rate. Its microfinance model has been applied to Krishi Bank of Bangladesh, one of the most successful microfinance institutes in the globe.

"Concerning the new products that are still being studied, GSB will create its own models that may be examples for other financial institutions," said Dr Tachapol.

In the long term, GSB will expand business through the microfinance segment, hoping to become the largest bank in the region in terms of microfinance, said Dr Tachapol.

He said the bank has prepared for the AEC by increasing new businesses such as foreign exchange, trade finance, packing credit and others.

The key strategy is to upgrade three provincial branches in each part of the country to be a regional business centre and provide full banking services at theses branches. These are at Mae Sai, Udon Thani and Hat Yai.

"The AEC will affect not only Bangkok but the whole country. Border trade will become more active, and land prices in major provinces are increasing significantly," he said.

Dr Tachapol said these strategies will be implemented over the next 3-5 years.

At present, GSB operates 63,000 community financial funds in 80,000 villages under the Village Fund scheme, which has about 17 million accounts. About 30,000 communities are potential users of the new microfinance products, he said.

New products will be introduced through its community financial adviser, a mor nee or debt doctor.

GSB also plans to set up new matching funds with foreign partners after the success of its Singaporean fund. The bank has an investment portfolio worth 300 billion baht.