SMEs seen needing relaxed loan criteria from banks

SMEs seen needing relaxed loan criteria from banks

The business sector is calling on the government to help tackle escalating financial hardship of small and medium-sized enterprises (SMEs) before the country officially reopens by mid-October as vowed by Prime Minister Prayut Chan-o-cha on June 16.

Speaking after a joint meeting between the Federation of Thai Industries (FTI), the Thai Chamber of Commerce (TCC), the Federation of Thai Industries, Thai Bankers' Association and the Federation of Thai SMEs Association and the premier, Supant Mongkolsuthree, FTI chairman, said SMEs still have many problems, especially cash flow because many could not obtain loans from commercial banks.

Given the commercial banks' strict risk management criteria, many SMEs' existing loans are classified as non-performing loans (NPLs), making them unable to secure new credit lines.

"The Bank of Thailand and commercial banks should relax their risk management criteria in order to allow SMEs which still have problems to borrow so that they can continue their businesses," said Mr Supant.

He said the new loan approval should be based on SMEs' opportunity to make a profit, and the banks should consider the qualifications of the loan applicants from collateral they place without checking their credit with the National Credit Bureau.

Sanan Angubolkul, chairman of the TCC, said the government should relax regulations in order to allow commercial institutions to have their own criteria to offer new credit lines.

He said the idea of establishing the National Credit Bureau was to bring Thailand's financial system back into full drive after the economic crisis hit the country in 1997, but right now Thai financial institutions are financially strong.

In the meantime, the Federation of Thai SMEs Association proposed the government establish a new fund to assist SMEs, especially those which are with NPLs.

The fund will help NPL-plagued SMEs to have more liquidity, said Saengchai Teerakulvanich, president of the Federation of the Thai SMEs Association.

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