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BOT to relax conditions on Bt500bn SME loan scheme

Jul 24. 2020
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By The Nation

The Bank of Thailand is considering relaxing conditions for its Bt500-billion programme of soft loans for small and medium-sized enterprises (SMEs), said a source familiar with the matter.

The move by the central bank is in response to complaints that tight conditions were preventing SMEs from taking the soft loans, which are being allocated via commercial banks. 

Under the new plan, the central bank will offer Bt100 billion in loans at 0.01 per cent interest to banks, to relend to SMEs at an interest rate of 2 per cent over three years.

The loans should help firms keep their workers for at least six months. Banks will send the money directly to the bank accounts of SME workers, each of whom will get about Bt10,000 a month. The SMEs will also get a 12-month grace period on the principal payment. The central bank is expected to distribute Bt60 billion in three-year loans aimed at retaining workers. The remaining Bt40 billion will go on three-year loans to support companies’ working capital. To boost liquidity, each SME will receive about 70 per cent of its average 3-month revenue.

Firms taking employment loans will be required to keep at least 80 per cent of their workers. The loans are expected to help 40,000 SMEs to keep about 1 million workers, said the source.

Banks may also allow some firms to repay the interest with retail vouchers which can be redistributed to bank customers. The employment loan is similar to Kasikornbank’s loan scheme to help companies retain their employees during the pandemic.

Moreover, the central bank will also invite the Thai Credit Guarantee Corp to provide insurance for soft loans of more than two years’ term, the informed source added.

The central bank earlier revealed it was revising soft loan conditions, but did not elaborate. The Bt500-billion soft loan package launched in April but so far a smaller-than-expected Bt100 billion of the loans have been approved.

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