Cautious commercial banks aim personal loans at employees of companies they know
SEVERAL commercial banks are playing it safe with personal loans amid the current economic uncertainty by moving to the employees of private companies whose payrolls they handle, as the banks consider that they can check their credit backgrounds more easi
The banks have highlighted low interest rates, maximum credit limits of Bt1.5 million and repayment terms of five years for people who earn regular monthly salaries of at least Bt15,000.
Krungthai Bank promotes MRR (minimum retail rate) plus 7 percentage points or 14 per cent per annum to payroll clients of private companies who have monthly salaries of Bt15,000 and up.
Jirarack Kulsingh, first vice president of KTB, said the bank had found that many payroll clients were not accessing personal loans, and these are low-risk customers.
She said many banks had penetrated this segment because they can check loan applicant’s credit backgrounds quickly and easily, unlike with business clients.
The bank has been publicising its personal-loan programme to private companies that want their employees to benefit from it.
At present, about 70 companies have signed memoranda of understanding with KTB on participating in this programme, with a few others expressing an interest in such MoUs.
To qualify, the companies must comply with the bank’s conditions, such as healthy annual financial performance, and their workforce should not be less than 300.
Even though KTB has put more effort into offering personal-loan products to holders of payroll accounts, it has targeted new lending this year at only Bt16.3 billion, lower than last year’s Bt20 billion, because the current economic circumstances are not conducive to a high target, she said.
Kasikornbank is the latest bank to design a personal-loan programme for salaried employees, offering a special monthly interest rate of 0.76 per cent and instalment plans of up to five years.
Noppawan Jermhansa, executive vice president, said KBank had improved its personal-loan services to payroll customers after finding that some of them needed extra cash for travel, special occasions or tuition fees, or to spend on year-end festivities.
“However, KBank continues to exercise caution towards loan growth. Thus we are expanding our market presence in a prudent manner, focusing only on quality, low-risk customers. KBank is targeting personal-loan growth almost at parity with the overall market expansion.”
It targets the growth of personal loans at 4-6 per cent.
Kasikorn Research Centre forecasts that the extension of personal loans by commercial banks this year will drop by 3-6 per cent and that they will remain cautious and use stringent criteria for screening new customers.
Meanwhile, some non-banks will begin to expand their customer bases upcountry – where the economy has been growing steadily – to increase their earnings and avoid the intense competition in Greater Bangkok.
