Banks aim to cash in on higher consumption
Banks say they will focus more on the retail trade, considering that this segment will gain from the emphasis on domestic consumption planned by the new government.
Lower fuel prices, the upcoming increases in the daily minimum wage and starting salaries for university graduates are all factors meant to increase consumption, and small enterprises, especially retailers, are expected to benefit the most from this.
According to Kasikornbank, the largest holder of outstanding loans, there are 3 million small and medium-sized enterprises in Thailand, of which about 1.9 million are in the retail trade.
KBank executive vice president Pakorn Partanapat said that if these 1.9 million operators required loans to expand their businesses to deal with the rise in domestic consumption, the bank estimated the loan requirement would be no less than Bt600 billion.
However, most retailers have no credit guarantors, so it is difficult for them to access financing. Therefore, the bank has launched a programme under which retailers can acquire loans using only deposit accounts as credit guarantees.
This is part of KBank's strategy to encourage people without financial statements to make a minimum deposit every month so they will be allowed loans approved by the bank.
Weidt Nuchjalearn, senior executive vice president of Krung Thai Bank, said many countries that relied on exports would have to shift focus to local consumption to maintain economic growth.
In Thailand, the government knows that global economic volatility might hurt the export sector, so it needs to boost domestic consumption to compensate.
Weidt said the reduced oil prices would leave people with more money to spend on other things, which would benefit small businesses.
"We want to increase the loan proportion from this segment to 60 per cent next year from 40 per cent currently," he said.
Of the 3 million SMEs in Thailand, only 500,000 had accessed financial sources, he noted.
Sirichai Sombutsiri, senior executive vice president and head of Siam Commercial Bank's business banking group, said small enterprises should be supported by the state in terms of credit guarantees.
He noted that higher incomes would be positive for small businesses. At SCB, small-business loans this year are expected to exceed the target of Bt50 billion after recording new loans of Bt40 billion in the first eight months.
Outstanding SME loans this year could achieve Bt200 billion, he said.
