BOT to extend softloans in March
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The Bank of Thailand will start providing low-interest loans in early March for relending by intermediaries to victims of the floods.
“We’re starting to ask financial institutions wanting the soft loans to notify us within two weeks after the Finance Ministry’s announcement on the disaster zones. We will transfer them the funds within three days,” Pongpen Ruengvirayudh, assistant governor of the Financial Markets Operations Group, said yesterday.
The Finance Ministry’s announcement is expected to be made today.
The central bank will charge 0.01 per cent in interest to the commercial banks, branches of foreign commercial banks and six state-run specialised financial institutions that will participate in the programme. Then they can provide credit to affected customers at an interest rate not exceeding 3 per cent.
Borrowers have to reside in the disaster zones and claim they were affected by last year’s floods.
The flood loans are limited to Bt1 million for individuals and Bt30 million for SMEs.
Loan approvals are subject to each bank’s criteria, but if borrowers do not follow the programme’s conditions, the central bank will charge them a penalty of 10 per cent per year. This assistance scheme will last no more than five years, ending on December 31, 2018. Banks are required to request the loans by the end of next year. The loans will not fuel inflation as the BOT plans to sell an equivalent amount of bonds to sterilise liquidity, Pongpen said.
