Private lenders urged to help small firms
Finance permanent secretary Somchai Sujjapongse has urged private financial institutions to cut interest rates for microfinance and nanofinance borrowers whose loans are guaranteed by the Thai Credit Guarantee Corporation (TCG).
The government is considering how to approach these institutions to join in developing the economy, especially in cutting interest rates for small borrowers whose loans are guaranteed by the TCG, Mr Somchai said.
Retail loans guaranteed by the state-owned corporation have hardly turned sour, he said, adding that privately owned financial institutions are still making a healthy profit despite the tepid economy.
The TCG yesterday signed agreements with 17 financial institutions for 13.5 billion baht worth of credit guarantees in the second phase of the microenterprise scheme.
Under the scheme, the TCG offers a credit guarantee of up to 200,000 baht for each borrower for a maximum of 10 years and covering 30-50% of loans that turn sour. Lenders must shoulder the remaining losses.
Small businesses eligible for the scheme are those with tangible assets, with the exception of land, of no more than 5 million baht. The scheme is expected to provide credit guarantees to 135,000 borrowers.
Mr Somchai said the TCG is considering relaxing conditions for retail borrowers in line with some commercial banks' requests.