Bank of Thailand sets out three steps to address SME credit crisis

Vitai Ratanakorn, governor of the Bank of Thailand (BOT), said at the TNN Future Forum 2026 that the small and medium-sized enterprise (SME) sector was facing a crisis.

Although SMEs employed about 13.6 million people, equivalent to 70% of total employment, and accounted for 35% of gross domestic product (GDP), SME loan growth had remained negative for 16 consecutive quarters.

Lending to large businesses, meanwhile, had returned to positive growth over the previous two to three quarters, reflecting a K-shaped recovery.

Vitai said SME growth relative to GDP had fallen from 1.9%, against average GDP growth of 3.5%, to only about 1%.

Loan rejection rates for SMEs were about 60-70% and could be higher for some groups.

The rejection rate was 78% for new SMEs with no financial history and 86% for businesses with an existing bad-debt record, possibly reaching 90% in practice.

Even among the top-performing 30% of SMEs, only 21% had access to credit, compared with 61% of large companies in the equivalent performance group.

SMEs also faced average interest costs of about 6.9%, compared with about 3% for large companies.

Data covering about 130,000 SME legal entities showed that 50% had closed by the time they had been operating for 10 years, while only 30% remained after 25 years.

SMEs established from 2013 onwards saw revenue rise from 100 to 127 over 10 years, below the 175 achieved by earlier generations of SMEs.

The BOT is therefore preparing action in three areas to reduce costs and risks in the credit system and connect SMEs with potential sources of finance.

These comprise launching a Credit Portal by the end of 2026 as a marketplace connecting SMEs with banks and non-bank lenders; developing a new credit-guarantee mechanism along the lines of the Thai Credit Guarantee Corporation (TCG), which is expected to be submitted to the Ministry of Finance for consideration within three to four months and which the BOT hopes will begin operating in 2027; and using alternative data to assess the repayment capacity of SMEs with no financial history.

Separately, amid discussion of possible SME assistance measures, Surapol Opasatien, an assistant executive at National Credit Bureau Co., Ltd. (NCB), wrote on his Facebook account, “Surapol Opasatien”, about an approach that might “go deeper than before”.

He said the post followed a conversation with a female vendor while he was passing through the Thewet area, where she showed him AI-processed information on a mobile phone.

Surapol stressed, however, that the conversation did not confirm that such a measure had been introduced.

The information indicated that assistance might focus on vulnerable SMEs affected by the war between the United States and Iran on Tuesday (February 24, 2026).

It would not cover borrowers with non-performing loans (NPLs) classified as Stage 3 whose debts became non-performing before Monday (June 1, 2026), because of moral-hazard concerns.

It might also limit credit to no more than THB20 million at each financial institution.

The information also specified a cut-off date of Saturday (August 1, 2026), but gave no further details on the criteria it applied.

Stage 1 borrowers whose loans were still performing and who had previously undergone DR or TDR debt restructuring would need to have been restructured after Saturday (February 28, 2026).

Surapol said these borrowers were still servicing their debts well but had a “scar” and had been affected by the war.

He observed that those still making payments reliably and trying to stay afloat might be dissatisfied with the condition.

The information also mentioned borrowers classified as SM or Stage 2 and NPL borrowers in Stage 3, with the latter required to meet the bad-debt date condition outlined above.

The form of assistance shown in the AI-processed information involved reducing instalment payments to 30%, or another proportion, for 12 months or another period, with the balance moved to the end of the repayment schedule.

Surapol compared the approach to a “fire-sale-style instalment reduction” and asked what would happen if the instalments paid were insufficient to cover interest and whether creditors might have to provide further assistance.

Surapol speculated that the assistance might be funded by money arising from delayed payments to the Financial Institutions Development Fund (FIDF).

He said he would later share what he had “dreamt up” about how it might be implemented.

Details were still unavailable on the interest rate, how interest would be calculated on the 70% deferred for 12 months, how the money would be applied to repayments and whether the number of instalments would increase.

He suggested that those conducting a “dry lab” exercise ask the SME federation whether the approach would address the issue and meet borrowers’ needs.