IBank to extend credit
The Islamic Bank of Thailand plans to extend credit aggressively next year after it gets a Bt10-billion capital injection, even though many borrowers are now running into difficulties repaying their home loans because of the rising cost of living.
"Our new loans [excluding loans to support government policies] are expected to expand by 20 per cent next year," Teerasak Suwanyos, managing director of iBank, said yesterday.
The bank will also participate in a plan to establish the Islamic Asean Fund worth about US$40 billion (Bt1.2 trillion) in preparation for the single market to be formed under the Asean Economic Community in 2015.
Deputy Finance Minister Viroon Tejapaibul said the government had assigned iBank to provide financial services particularly to residents and small businesses in the South.
Muslims nationwide should also be able to access microfinance services to ensure a better living standard, he said.
Teerasak said the Finance Ministry, Government Savings Bank and Krung Thai Bank were going to invest Bt10 billion in the bank by the end of this year.
Next year the bank plans to lend Bt40 billion in new credit, including Bt18 billion for government policies.
The bank's outstanding loans have hit Bt103 billion, with non-performing loans standing at 4.7 per cent.
Many borrowers are experiencing problems making their loan instalments.
"We help them by allowing them to pay only interest, not principal," Teerasak said.
Rising oil and food prices have strained the finances of the bank's customers, he said.
Asean members led by Malaysia plan to set up a $40-billion Islamic Asean Fund in parallel with the swap line worth $120 billion under the Chiang Mai Initiative. Asean plans to mobilise funds from Arab countries under the Organisation of the Islamic Conference.
The proceeds are to be used to stabilise financial markets in member countries when any of them faces abrupt capital outflows, similar to what happened in Thailand and other countries in the Asian financial crisis of 1997.
IBank is still implementing the credit-card-financing scheme initiated by former finance minister Korn Chatikavanij. Those who apply for loans get a profit rate (interest rate) of 10 per cent in the first year, Teerasak said.
