Caution urged on farm loans
Agricultural lending remains a key business of finance houses but requires caution and tight credit conditions to ensure asset quality, bankers said yesterday.
“Lending to the agricultural sector needs manpower and skilled staff to check a customer’s character and inventory,” said Jiratchayuth Amyongka, executive vice president of Thanachart Bank.
TBank will continue providing liquidity to the agricultural sector, but credit expansion will depend on the debt-servicing ability of customers, he said.
The bank has to set tight credit criteria including the inspection of stocks. Farm crops are uncountable, so the bank regularly has to survey the warehouses of customers by sending its own staff or hiring outsourcing companies.
The bank is ready to support existing customers desiring to expand their business, but for new customers, the bank has to be more careful, Jiratchayuth said.
Agricultural loans account for 2-3 per cent of the Bt83-billion portfolio for small and medium-sized enterprises.
The agricultural portion could be extended.
TBank has a clear focus in each industry to plan lending activities, he added.
Sirichai Sombutsiri, senior executive vice president of Siam Commercial Bank, said the agricultural sector was still a priority at SCB.
The government’s rice-pledging scheme has supported rice mills, so some banks are refocusing on that business.
Rice millers have “guaranteed” revenue from the pledging scheme, so SCB will concentrate on giving credit to reliable existing customers.
The scheme helps sustain the prices of rice.
Agricultural loans represent 25-30 per cent of total outstanding loans of Bt250 billion at the bank, and that is a suitable proportion for SCB. The bank has a policy to capture the sector, since Thailand is an agricultural country.
For other industries, SCB will pay attention to those that can adjust well to the rapidly changing world.
SCB president Kannikar Chalitaporn said the exposure of the “white lie”??? means little to exporters had figured out how much the global situation will affect their shipments.
“Most exporters have estimated their export figures based on the opportunities in doing business and the weighted risk from the global economy,” she said.
