Bangkok Bank (BBL), the country's largest lender by total assets, is cutting its minimum retail rate (MRR) by 25 basis points for six months, starting on April 29.
The decision comes in response to a government appeal aimed at alleviating the financial strain on customers.
According to BBL's statement, the bank will cut its MRR by 25 basis points for six months, available to all loan customers, covering both normal and vulnerable clients.
The bank's current MRR is 7.30% per year.
The Thai Bankers' Association (TBA) held a meeting on Wednesday where members agreed to reduce their MRR by 25 basis points for six months to help vulnerable customers.
The aim is to ease the financial strain on small businesses and individuals facing challenges servicing their debts amid an uneven economic recovery.
The TBA acted after Prime Minister Srettha Thavisin met with chief executives of the country's largest banks: BBL, Kasikornbank (KBank), Krungthai Bank (KTB) and Siam Commercial Bank (SCB).
Mr Srettha has repeatedly urged the Bank of Thailand to lower the policy rate to bolster the economic recovery.
However, the Monetary Policy Committee opted to keep the rate unchanged at 2.5% for a third straight meeting earlier this month, noting the Thai economy is sustaining its growth trajectory, surpassing the level of 2023.
Both KBank and SCB list an MRR of 7.30%, while KTB's MRR is 7.57%.
In its statement, BBL said the lower MRR will support the recovery of customer groups and help with Thai economic expansion, aligning with government initiatives and the Bank of Thailand's financial stability objectives.
"The bank has provided financial assistance to vulnerable customers during the pandemic and remains committed to providing help following the pandemic amid ongoing economic risks stemming from both internal and external factors," BBL said in the statement.