Government Savings Bank boss questions BoT curbs

Government Savings Bank boss questions BoT curbs

The head of state-owned Government Savings Bank (GSB) has voiced concerns that the Bank of Thailand's stringent measures to curb mortgage lending will deal a blow to property-related business.

President and chief executive Chatchai Payuhanaveechai asked the central bank to take into consideration the potential impact from the soon-to-be-implemented measures on business relevant to property development, including furniture and contractors.

Should the central bank's measures prove too stringent, the residential market will cool down and send a ripple effect through employment in these sectors, Mr Chatchai said, adding that the central bank should thoroughly consider the pros and cons of the measures.

According to the Bank of Thailand, homebuyers will be required to make a down payment of at least 20% of home value for new mortgages worth 10 million baht and up, as well as for second homes, in an effort to curb mortgage and property risk and improve housing loan quality.

The central bank will also require lenders to limit mortgages together with top-up mortgages such as personal loans and loans for mortgage-reducing term assurances (MRTA) at 80% of home value for second homes and those worth at least 10 million baht, and 100% for first homes valued below 10 million.

The requirements are expected to be implemented from Jan 1 next year.

Property developers and mortgage lenders have asked the central bank to focus on reining in mortgages for third and subsequent home purchases and delay the planned measures for an additional six months.

Mr Chatchai said the measures will be a boon to banks, compelling them to think more cautiously about offering mortgages.

Even so, state-controlled banks like the GSB and GH Bank want the measures to be implemented for third mortgages and to delay the enforcement schedule to give all parties time to adjust, he said.

Given that the GSB's housing loans extended to homes priced below 2 million baht per unit account for 70-80% of its mortgage portfolio, Mr Chatchai expects the bank to avoid negative impact from the measures.

In the meantime, the GSB aims to lend 80 billion baht to startups next year as a channel for them to access funding sources.

The bank forecasts loans to startups to reach 25 billion baht this year, of which 15 billion was lent already, Mr Chatchai said.

The bank now has 82 small and medium-sized enterprise centres across the country to serve startups.

In the event that startups need venture capital, the bank is ready to do so through its venture capital fund, Mr Chatchai said.

The GSB's venture capital fund has invested more than 400 million baht in 15 startups, he said, and is considering investment in more than 20 startups worth a combined 1.05 billion.

The bank also has a fintech unit tasked with digital business development, he said.

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