GSB says it can meet the Village Fund loan target
THE GOVERNMENT Savings Bank (GSB) is confident that it can meet the government's target to give out Bt30 billion in loans via the Village Fund scheme in three months while keeping the non-performing loan ratio in the 1-per-cent range for the whole seven-y
“We expect to give out loans of Bt5 billion to Bt10 billion to Village Fund members in the first month,” Chatchai Payuhanaveechai, director and secretary of the GSB, told the press at a seminar arranged by Thammasat University yesterday.
The new economic Cabinet led by Deputy Prime Minister Somkid Jatusripitak pushed the Bt136-billion stimulus package through the Cabinet last Tuesday, which included the injection of Bt60 billion into the Village Fund, a legacy of Thaksinomics.
The GSB and the Bank for Agriculture and Agricultural Cooperatives were tasked with providing Bt30 billion each to 59,000 A- and B-grade Village Funds, which normally manage non-performing loans at about 1-2 per cent. That would average about Bt1 million per village.
The seven-year loans are interest-free for the first two years and no more than 4 per cent for the remaining five years to keep the debt burden ratio low.
There are 79,000 Village Funds spread across the country.
“The Village Fund programme already has a mechanism to mitigate NPLs, so the GSB and the National Village and Urban Community Fund Office separate customers into grades A and B, which have good quality.
“And the ratio of NPLs [to outstanding loans], which is about 1-2 per cent, means that we do not expect any damage in terms of financial cost,” he added.
Finance Minister Apisak Tantiworawong said the government expects the Village Fund stimulus measure to produce a multiplier effect that will boost domestic consumption and encourage small and medium enterprises to invest before the second phase of the package can begin next week.
Domestic confidence should improve in the coming months from the introduction of the stimulus package after the University of the Thai Chamber of Commerce’s Consumer Confidence Index sank to a 15-month low in August.
“The current domestic confidence is low because people had high hopes that the government’s investment projects will be launched.
“Even though the government intends to build infrastructure with a long-term perspective, such projects being large, involve a lot of processes and require a lot of time, which means that capital from the government will not be released fast enough,” he said.
“The stimulus package will fill the investment void and we believe that once the void has been filled, then the confidence level should come back when we have accomplished what we said we would do,” he said.
The Finance Ministry has finished with tax preparation for the second phase of the stimulus package, which includes added incentives for corporations beyond what the Board of Investment offers. They are expected to go to the Cabinet next week.
