Wednesday, November 25, 2020

SMEs to get targeted aid when blanket support expires next week: BOT

Oct 17. 2020
Roong Mallikamas, assistant governor, briefs reporters on a new financial aid strategy for SMEs at the Bank of Thailand on Thursday.
Roong Mallikamas, assistant governor, briefs reporters on a new financial aid strategy for SMEs at the Bank of Thailand on Thursday.
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By The Nation

The Bank of Thailand (BOT) will shift from a blanket strategy to targeted aid measures for small and medium-sized enterprises (SMEs) affected by Covid-19 when their loan-repayment holiday expires next Thursday (October 22).

The debt suspension covered 1.05 million loans worth a total Bt1.35 trillion, out of total debts of Bt6.89 trillion covered by all government measures, BOT assistant governor Roong Mallikamas said on Friday. The measures, implemented via commercial and state-owned banks, include a debt moratorium, debt restructuring, rate cuts, and others, she said.

The end of the debt suspension would not lead to a spike in defaults, as state-owned banks have extended the measure for another three to six months, covering Bt400 billion worth of loans, she assured.

Meanwhile commercial banks taking care of Bt950 billion in debts have found that the majority of debtors will be able to service their loans, she said. Banks will continue to provide a lifeline for those unable to resume debt payments or only able to make partial payments, in order to prevent their debts becoming non-performing loans (NPLs).

Banks have already contacted all but 6 per cent of this group, Roong said.

Some businesses have recovered to almost pre-Covid-19 levels, including beverage firms, electrical appliance firms and traders, she added. But tourism-related sectors have recovered at a slower pace, with hotels only up to 26 per cent of their pre-coronavirus business.

“Therefore, the central bank has asked banks to shift from blanket aid to targeted support that meets specific demands of individual debtors,” she said.

Extending blanket support could be damaging in the long run, increasing the debt burden of SMEs or leading to exploitation by debtors, she said.

It could also undermine financial stability in the long term, reducing liquidity by about Bt200 billion annually, she added.

The central bank has permitted banks to freeze their loan classifications until the end of this year in order to prevent debts turning bad.

Debtors who could not contact their lenders or could not restructure their debts  could reach the central bank debt-solutions channel via https://www.1213.or.th/App/DebtCase, she added.

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