Central bank eases soft loan conditions as Covid surge threatens economy
The Bank of Thailand has relaxed conditions attached to its Bt500-billion soft loan package, making it easier for individuals and companies to access credit.
The relaxation follows a surge of Covid-19 cases in Thailand as well as other countries around the world. Some countries have also been hit by a new mutation of the virus, signalling a severe and lingering pandemic that will affect trade, exports, tourism and the overall Thai economy, said the central bank.
In response, it has narrowed the definition of a “business group” for loan applicants, meaning more people can apply for the loans.
Under the new rules, a “business group” covers only the borrower and his/her spouse, making other family members eligible for the loans. For corporates, a business group now covers the company and its subsidiary but opens up loan access for linked companies.
The new rules also allow borrowers to take two loans, when previously they were limited to one. However, the total amount loaned must not exceed 20 per cent of their outstanding debt as of December 31, 2019. Commercial banks will grant borrowers a 6-month grace period on interest payments. Banks will be compensated for loans that turn bad after the two-year repayment period. Compensation will be based on the loan quality.
The new rules will come into force in January, the central bank said.
