Although the Bank of Thailand will stick to its Jan 1, 2019 deadline of requiring banks to use financial accounts submitted by small and medium-sized enterprises (SMEs) to the Revenue Department for loan approval, the central bank is offering a three-year grace period for full compliance.
After several discussions with the Thai Bankers' Association about the potential harm to SMEs from the new regulation, the central bank will allow three years to adopt a single financial account, said Kasikornbank executive vice-president Surat Leelataviwat.
The regulator realises the effects on SMEs and concerns about their loan accessibility, he said, adding that banks will help SME customers to gradually enter the tax system, improve their business operations and strengthen competitiveness.
"It will take time for SMEs to adopt a single financial account," Mr Surat said. "Otherwise, it will hurt SME business as a whole and could drive them to loan sharks. Most of them aren't ready now."
Under the single financial account, the Bank of Thailand requires banks to give greater consideration to financial statements submitted to the Revenue Department when considering SME loans.
The five largest banks, including KBank, are offering a fixed interest rate of 5% for two years to SMEs that apply and comply with the new regulation.
Mr Surat said some of the bank's SME customers have applied for the special loan package and the bank hopes that loan demand will increase after the 2017 financial year is closed.
KBank, the country's third-largest bank by assets and the biggest SME lender with a loan portfolio of 700 billion baht, has also adopted data analytics for SME lending. The bank aims to increase data-based new SME loans to 60 billion baht, representing 30% of total new SME loans for this year and up from 40 billion or 20% in the previous year.
"With information-based lending, the bank's success rate on additional SME loan offerings increases to 40-50% of total applications using the new approach, compared with a success rate of 20-25% for the traditional one," Mr Surat said.
Krungthai Bank (KTB) president Payong Srivanich said banks are abandoning the one-size-fits-all lending approach and shifting to using an individual-based one, which lets them charge borrowers at different rates depending on risk profile.
KTB and several other banks are extending more loans under this model, which can better meet customer demand and increase fairness, Mr Payong said.
"The tendency for lending is shifting from strafing to target shooting," he said. "Such a shift must rely on big data technology, which can be used to clearly analyse each customer group."
Mr Payong said the bank has continuously invested in developing the big data system.
He voiced optimism that the bank's lending growth will expand this quarter after contracting in the previous quarter.