The state-run Government Savings Bank (GSB) is offering a series of financial products targeting the elderly, with the aim to attract 10,000 senior citizens to the services.
The targeted number accounts for 0.5% of the bank's total customers at the moment, said chief executive and president Chatchai Payuhanaveechai, adding that the bank also expects to lend 100 billion baht or 5% of its outstanding loans to senior citizens.
The government has forecast that the number of people aged 60 and over will represent 16.8% in 2020 from 13.8% in 2015 and rise to 20% in 2025, when there will be three people of working age for each senior.
GSB's series of financial products comprise two savings and three lending products.
The first savings account offers interest rate to depositors at 1% per annum.
To open a savings account, customers must be at least 60 years old and can open only one savings account to deposit anywhere between 100 and 1 million baht.
The second savings account is a 24-month time-deposit account with step-up interest rates averaging 1.87% per annum. Each senior customer is allowed to open only one special savings account with a minimum deposit of 10,000 baht and a maximum of 1 million baht.
For loans, the bank has rolled out personal loans for borrowers aged 60-70 with a flat interest of 1% per month for up to 200,000 baht.
Under the personal loan, GSB will absorb premiums for life insurance policies, which will be used to repay loans in the event of the borrower's death, and will allow the Thai Credit Guarantee Corporation to guarantee the loan.
The second lending product is reverse mortgages for homeowners aged 60 and older.
The state-owned bank provides 70% of the appraisal value for low-rise residences and 60% in the case of condominiums.
Reverse mortgages allow elderly homeowners to convert their home equity into cash with no loan repayments until the borrower dies to help cover monthly living expenses and healthcare costs. Upon the borrower's demise, heirs have the option to either pay off the loan and reclaim ownership of the homes or let lenders put the homes on sale.
The bank will make monthly payments to borrowers, who can live in their homes until they die or the loans are fully taken out, for up to 25 years at 6% interest rate per annum.
After the loan is completely doled out or borrowers pass away, heirs or borrowers can choose to buy back the homes.
In case that heirs or the borrowers do not want to buy the homes back, the bank will put the home on sale. If the home is sold for more than the value of the loan, the bank will return the difference to the heirs or the borrowers.
Initially GSB will allow only condominiums and homes in residential projects to be pledged for the reverse mortgage.
Mr Chatchai said if only 10% of the bank's outstanding mortgages take advantage of the home equity conversion, the bank can expect 30 billion baht in reverse mortgages.