The Finance Ministry pitched the idea of merging the SME Bank with the Government Savings Bank (GSB), but Minister Kittiratt Na-Ranong is wary.
The Fiscal Policy Office (FPO) conducted a study to seek a solution to the non-performing loan problem of the SME bank. Its NPLs stood at 30% of outstanding loan portfolio of 100 billion baht.
Mr Kittiratt said while he agreed with the FPO on the merger, the timing was not good because the SME Bank has not yet solved its internal problems.
"I don't think it's a good idea to merge the weak one [SME Bank] with the strong one [GSB] right now. SME Bank should address its own problems first, both the lack of transparency in its credit approval process and NPLs," said Mr Kittiratt.
The Islamic Bank, another state bank, has also faced the same problems as the SME Bank. Earlier, the government allowed both banks to raise funds totalling 1 billion baht as a temporary measure to improve their liquidity.