SMEs welcome lower lending rates but access still a problem
In response to lending-rate cuts by commercial banks, Tanit Sorat, president of the V-Serve Group, a small logistics business, said the lower rates were good but if the banks really wanted to help SMEs, they should make loans easier to get.
He said small and medium-sized enterprises were complaining about the difficulty of getting bank loans. Banks usually demand collateral, which they value very low, often below 70 per cent of market prices, reducing the chance that SMEs can access loans. It is understandable because banks are worried about rising non-performing loans amid the sluggish economy, he noted.
Many banks opt to buy government bonds to make money since this is much safer than lending to SMEs, although they get lower rates of investment returns. Meanwhile many large companies stay away from the banks as they can raise funds more cheaply by issuing corporate bonds, Tanit said.
Bangkok Bank, Krungthai Bank, Kasikornbank and Siam Commercial Bank have announced cuts in their minimum retail rates to assist SMEs.
Bangkok Bank on Monday announced cuts of 25 and 50 basis points respectively in its minimum overdraft rate (MOR) and minimum retail rate (MRR) to 7.125 per cent for both types of loan, in order to help lower the financial costs of SMEs, increase their competitiveness, and support the economy.
KTB and KBank announced they were cutting their MRRs by 0.50 percentage point to 7.12 per cent.
Meanwhile, SCB announced it was reducing its minimum lending rate, MOR and MRR by 25 basis points to 6.025, 6.870 and 7.370 per cent, effective on Tuesday.