State banks lowering interest rates after MPC cut

The rate cuts by the Government Savings Bank (GSB) and Small and Medium Enterprise Development Bank of Thailand (SME Bank) took effect yesterday.

Luck Wajananawat, president of the Bank for Agriculture and Agricultural Cooperatives, said a BAAC committee chaired by Finance Minister Sommai Phasee would decide on its rate movement on Monday.

“Already, the BAAC’s interest rates are at proper levels and below those of the commercial banks. If the bank’s [own] borrowing costs go down, there will be a review on our lending and deposit rates,” he said.

The bank’s financing costs, including administrative expenses and risk, average 2 per cent. Its minimum lending rate (MLR) is 5 per cent, while the minimum retail rate is 7 per cent.

An anonymous Finance Ministry source said the state banks might gradually reduce their interest rates to lessen customers’ burdens while the economy remains sluggish.

SME Bank cut its lending and deposit rates by 25 basis points and GSB trimmed its rates by 12.5 basis points. Government Housing Bank (GHB) will decide on its rates today.

Chatchai Payuhanaveechai, GSB president, said the bank had cut its lending rate by 12.5 basis points and deposit rate by 5-20 basis points under the government’s policy to stimulate the economy.

After yesterday’s rate cut, GSB is expected to see higher expenses, while losing income of Bt1 billion per year.

On the project to pay Bt1,000 per rai to farmers for no more than 15 rai, the BAAC has completed about 99 per cent of the payments, covering 3.5 million farmers on 38,000 rai (6,080 hectares), for a total of Bt38 billion.

On the income-compensation project for rubber farmers at Bt1,000 per rai for no more than 15 rai with Bt8 billion in total, the BAAC has made payments to 740,000 farmers or 99 per cent for a total of Bt7.46 billion.