SFIs urged to assist ailing borrowers

Finance Minister Arkhom Termpittayapaisith has ordered specialised financial institutions (SFIs) to assist borrowers after the first phase of debt relief measures ended on Thursday.

The minister is also vying to adjust soft loan conditions to assist struggling small and medium-sized enterprises (SMEs).

Despite the government easing lockdown measures and allowing the entry of the first group of Chinese visitors via the special tourist visa, the pandemic remains rampant across the globe, causing the Thai economy to struggle, Mr Arkhom said.

SFIs should assist borrowers after the broad-based debt relief measures ended recently, he said.

In the formal banking system, borrowers entering the debt suspension programme total 12.1 million, with combined loans of 6.9 trillion baht. Of the total, 6.57 million are identified as SFI borrowers with combined loans of 2.89 trillion baht.

Finance permanent secretary Krisada Chinavicharana said the financial status of SFIs remains strong, with high BIS ratios and loan-loss reserves exceeding non-performing loans.

For instance, Government Savings Bank's BIS ratio is 15.4% with loan-loss reserves at 1.2 times. The BIS ratio for the Bank for Agriculture and Agricultural Cooperatives and GH Bank stand at 12.5% and 15.3%, respectively. The two banks' loan-loss reserves are at 5.6 and 1.6 times, respectively.

Regarding the 500-billion-baht soft loan scheme, the Finance Ministry is discussing with the Bank of Thailand about whether to relax loan criteria, as the loan decree stipulates that loans are reserved only for SMEs affected by the Covid-19 pandemic, Mr Arkhom said.

The Bank of Thailand recently approved the extension of its 500-billion-baht soft loan scheme by six months and allowed companies listed on the Market for Alternative Investment to apply for the loans, a previous obstacle to participation.

As of Oct 12, the central bank had granted 119 billion baht worth of soft loans to financial institutions.