BoT: SME debtors need extension

BoT: SME debtors need extension

Outstanding loans valued at B15bn

Some 5% of total outstanding debts of borrowers classified in the small and medium-sized enterprise (SME) segment still need to extend their participation in the debt holiday programme until June 2021, says the Bank of Thailand.

The debt holiday extension for the 5% portion of SME debtors, who have a credit line of no more than 100 million baht, covers either principal or interest repayment on a case-by-case basis.

The 5% portion is valued at around 15 billion baht of total outstanding SME debts that applied for the existing debt relief measures, where assistance is provided on a case-by-case basis.

Given a marginal ratio of fragile SME loans, the central bank does not have a lot of concerns about non-performing loans (NPLs) of this business segment, said Vireka Suntapuntu, senior director of the specialised financial institutions' supervision and examination department.

The other 95% of total outstanding SME loans, which entered the debt relief programme and have a credit line not exceeding 100 million baht, could largely exit from the programme after it expired on Oct 22.

Some of the SME debtors, meanwhile, are participating in the debt relief programme on a case-by-case basis until this month.

Both commercial and individual borrowers, who applied for the Bank of Thailand's debt relief measures from the beginning of this year, have continued to exit from the financial aid programme.

The total debt amount peaked at 7.2 trillion baht in July, but has since declined to 6 trillion in October. Of that sum, 63% were classified as corporate loans and the rest attributed to retail loans.

After the central bank's first-phase debt relief measures ended on Oct 22, 66% of corporate debtors managed to exit the programme, 32% still continue to receive financial assistance and 2% could not be contacted by financial institutions.

For retail loans, 70% of corporate debtors exited the programme, 29% continued to participate in the programme and 1% could not be contacted.

Mrs Vireka said the majority of retail and corporate borrowers, who could not be contacted yet, is made up of SMEs with a credit line of no more than 100 million baht.

The ratio of these debtors is considered marginal and this will not put pressure on a spike in NPLs in the banking system.

"With the positive indications from the debt relief programme and manageable NPLs, the Bank of Thailand does not need to implement additional debt restructuring measures," said Mrs Vireka.

"But the central bank will closely monitor the situation including the fresh round of [domestic Covid-19] outbreak."

The Bank of Thailand has collaborated with financial institutions closely in monitoring the new virus outbreak.

Initially, the central bank requires financial institutions to prepare contact points, for both online and offline channels, to contact customers if further lockdown measures are imposed.

On Tuesday, the cabinet approved the headline inflation target for medium-term price stability at 1-3%. The Bank of Thailand's monetary policy will be used to anchor the targeted price stability.

The targeted headline inflation is appropriate amid changes in inflation dynamics coming from technological changes, as well as Thailand's ageing society, according to a statement from the Fiscal Policy Office.

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