The Finance Ministry expects Government Savings Bank (GSB) and Bangkok Commercial Asset Management Plc (BAM) to establish a joint venture asset management company (AMC) next month.
Finance Minister Pichai Chunhavajira said the AMC should help address non-performing loans (NPLs) by retail customers at state banks, especially small and medium-sized enterprises (SMEs), offering them relief from NPL status and a fresh start.
Mr Pichai said retail NPLs with state banks often have their debts fully provisioned and written off as expenses. Thus, the book value of these debts is not high.
Transferring these debts to the AMC will lead to more efficient management, he said.
Mr Pichai said collaborating with BAM on an AMC will enhance the debt management system.
The AMC would play a beneficial role because when these debts are restructured, the overall result should not be a loss, he said.
Vitai Ratanakorn, president of GSB, said the AMC will be a 50:50 joint venture between the bank and BAM.
GSB will transfer 40-billion-baht's worth of debts, accounting for 400,000 accounts, to the AMC for management, he said.
Debts to be transferred to the AMC will not exceed 20 million baht per account.
The joint venture will be considered a subsidiary of both BAM and GSB, which will help expedite debt management, said Mr Vitai. However, establishing the subsidiary company requires approval from the boards of both organisations, he said.
In a separate development, Mr Pichai said the Finance Ministry is preparing a budget of 10 billion baht to clear the debts of small-scale debtors to remove them from the blacklist.
He said more than 1 million retail debtors at state-owned specialised financial institutions with an average debt per person of 10,000 baht have defaulted and become NPLs, listed by the National Credit Bureau.
"The government wants to help resolve this issue by using a budget of 10 billion baht to clear these debts, allowing these debtors to be removed from the credit bureau list so they can gradually repay the state within 2-3 years," said Mr Pichai.