Moratorium borrowers need a break

Moratorium borrowers need a break

30% of SMEs under the scheme are unable to make repayments

An 80%-off sale at Baan Lae Suan Fair Midyear 2020 underscored the struggles of many businesses. (Photo by Somchai Poomlard)
An 80%-off sale at Baan Lae Suan Fair Midyear 2020 underscored the struggles of many businesses. (Photo by Somchai Poomlard)

Some 30% of borrowers entering the debt moratorium scheme are not expected to be able to service their debts at the same rate, says the Small and Medium Enterprise Development Bank of Thailand (SME D Bank).

The bank has implemented measures to help borrowers reduce their financial burden in line with the Bank of Thailand's debt relief programme. These include deferring principal and interest payment for up to six months for every borrower who has a credit line of no more than 100 million baht and who doesn't have an overdue loan of more than 90 days as of Dec 31, 2019, said Nartnaree Rathapat, SME D Bank's president.

There are 43,215 borrowers in this category, accounting for loans worth 66.5 billion baht.

The debt relief programme will expire this October.

Some 30% of customers entering the debt moratorium scheme have requested a break from debt repayment due to their inability to service their debt, Ms Nartnaree said.

For the borrower segment that cannot service debt normally when the debt moratorium ends, the bank will offer debt relief conditions to provide some capital for continuing to operate such businesses, she said.

But these borrowers will have to maintain their credit scores in order to be able to obtain additional loans in the future, Ms Nartnaree said.

SME D Bank has organised several debt relief measures to accommodate borrowers such as suspension of principal payment, interest-only payment and halving interest payments.

These measures will come into force once the debt moratorium programme ends in October.

Ms Nartnaree said SME D Bank is concerned about its non-performing loans (NPLs). The bank has accelerated the process of examining the financial health of borrowers, particularly those who already owe 1-3 instalment payments.

Overdue loans have been restructured through the bank's debt restructuring programme.

The bank expects its NPLs to stand at 18-19% of total outstanding loans this year. The existing NPL ratio is 17%, down from 19% at year-end 2019.

Debt relief measures and debt restructuring of distressed loans are the main factors taming a spike in NPLs, Ms Nartnaree said.

The bank targets this year's loan growth at 40 billion baht. New loans disbursed on a year-to-date basis amount to 25 billion baht for 13,000 borrowers.

SME D Bank has total outstanding loans of 99.7 billion baht.

For the 3% interest loan scheme fixed at two years offered to individual and corporate borrowers, loan disbursement has reached 1 billion baht on a year-to-date basis, with 9 billion baht left for further disbursement.

This loan scheme is mainly offered to businesses in tourism and hospitality.

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