GSB to restructure SMEs' debt in bid to stave off NPLs

GSB to restructure SMEs' debt in bid to stave off NPLs

Government Savings Bank (GSB) plans to restructure the debt of individuals and small and medium-sized enterprises (SMEs), totalling some 410,000 accounts and debt of 230 billion baht, says GSB president Vitai Ratanakorn.

The move aims to enable them to resume debt repayment and prevent their borrowing from becoming non-performing loans (NPLs), Mr Vitai said.

Early last year the bank restructured the debt of 870,000 accounts, amounting to 400 billion baht. These accounts were not yet NPLs, but borrowers felt the pinch from the prolonged Covid-19 pandemic.

As of the end of last year, 600,000 accounts remained in the debt restructuring programme.

GSB opened a new round of debt restructuring this year, which saw retail and SME borrowers totalling 410,000 bank accounts entering the programme.

Of that total, the bank is concerned 125,000 would become NPLs, representing total debt of 50 billion baht.

Under this debt restructuring plan, the bank grants waivers of the principal payment for this year to participating retail borrowers whose overdue debt repayments do not exceed 90 days, as well as SMEs that borrowed less than 250 million baht each.

Borrowers have to pay monthly interest in a range from 25% to 100% of the amount on a case-by-case basis, said Mr Vitai.

GSB is allowing participants to pay 50% of the principal next year, though they are required to pay 100% of the monthly interest.

If borrowers have been heavily impacted by the pandemic, the bank will reduce their monthly loan repayment by 50% to 75% on a case-by-case basis, with a three-month grace period on principal and interest payments, he said.

For retail NPL borrowers and NPL SMEs that borrowed less than 20 million baht, GSB will reduce the overdue interest for them, said Mr Vitai. The bank can offer them a maximum reduction of 100% of overdue interest payments.

GSB extended new loans worth 590 billion baht last year, while its NPLs were kept at 2.5% of outstanding total loans. As of Dec 31, 2021, the bank posted a record high in total assets of 3.04 trillion baht, total deposits of 2.57 trillion and outstanding total loans worth 2.27 trillion.

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