B36bn in SME soft loans drawn down
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B36bn in SME soft loans drawn down

Farmers queue for aid at the BAAC's Samut Prakan branch. Somchai Poomlard
Farmers queue for aid at the BAAC's Samut Prakan branch. Somchai Poomlard

Some 22,000 small and medium-sized enterprises (SMEs) have taken out 36 billion baht in soft loans sponsored by the Bank of Thailand in the weeks since the application period opened.

SME borrowing averaged 1.6 million baht per customer, and 74% of borrowers are smaller SMEs living upcountry, said Ronadol Numnonda, the central bank's deputy governor for financial institutions stability.

Bangkok Bank, the Bank for Agriculture and Agricultural Cooperatives (BAAC), Krungthai Bank and Siam Commercial Bank all recorded high figures for soft loans from the central bank, Mr Ronadol said.

The 500-billion-baht soft loan scheme is part of the third phase of relief measures. Under the two-year loan scheme, the central bank will charge commercial banks 0.01% interest to re-extend lending to SMEs with a maximum credit line of 500 million baht at 2%.

The government is also absorbing the interest cost to SMEs who receive soft loans for six months. SMEs eligible for the soft loans must also operate domestically, be non-listed companies and still have been servicing debt or making late payments within 90 days of the end of 2019.

Aside from soft loans, all SMEs with a credit line of up to 100 million baht are automatically offered a six-month grace period on principal and interest to alleviate the impact to small and mid-scale SMEs, which are an important source of employment.

The central bank has not been complacent after finding some banks have yet to apply for the soft loans, Mr Ronadol said. The Bank of Thailand has urged financial institutions to accelerate providing assistance to customers.

Low demand for soft loans could be attributed to holidays in the past two weeks and the unexpectedly long pledging process, he said.

Mr Ronadol said the Bank of Thailand's leftover soft loans remain ample to help virus-hit SMEs. Banks are being asked to communicate with branch staff about soft loan approval criteria, including prohibitions on charging fees or demanding that applicants buy insurance policies in return for the loans.

Banks should also consider other ways to assist SMEs who are not qualified for soft loans, Mr Ronadol said.

BAAC senior executive vice-president Kasarb Ngernruang said 1.86 million farmers had sought emergency loans from the bank worth 18 billion baht in total as of May 7.

The loan application period will run to the end of the year or until all loans are taken out, Mr Kasarb said.

The BAAC and Government Savings Bank (GSB) have each offered 20 billion baht in emergency loans to those affected by the pandemic, with a maximum 10,000 baht per borrower to comply with government policy. The banks charge 0.1% interest per month.

Apart from the emergency loans, GSB also provided 20 billion baht in loans to regular income earners ravaged by the virus, capped at 50,000 baht per borrower, with an interest rate of 0.35% a month. Both loan schemes met the quota for applications, but the process remains open because some applicants will be rejected.

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