FRIDAY, March 29, 2024
nationthailand

Bt10-billion lifeline to SMEs

Bt10-billion lifeline to SMEs

THE THAI Bankers’ Association (TBA) is stepping in to help liquidity-lacking SMEs by launching on August 15 the “Pracha Rath for SMEs” soft-loan scheme worth Bt10 billion.

The loans carry a fixed interest rate of 4 per cent for the first two years before changing to floating rate from the third to seventh years.
Predee Daochai, chairman of the TBA, told yesterday’s meeting of the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) that the campaign would run to the end of the year.
Each bank will open a credit line of Bt2 million per SME customer.
The SMEs must not use the proceeds for refinancing, since the banks want to help them expand.
Small businesses are the target of this programme because of the loan size of Bt2 million.
Each bank has its own package to help SMEs but “Pracha Rath for SMEs” is an extra option.
For example, the Government Savings Bank has prepared a Bt30-billion soft-loan package for SMEs to upgrade production machinery.
Thanyalak Vacharachaisu-rapol, head of money and banking at Kasikorn Research Centre, said the cheap credit could stoke the loan appetite of SMEs.
However, SMEs that have the potential to grow should be allowed to benefit from the soft loans because they can enjoy a lower cost of funds, while banks will get quality customers.
KResearch projects SME loan growth this year at 3.5 per cent versus 2.8 per cent last year, due to improving economic prospects in the second half.
Last year, the banking system had Bt4.26 trillion in outstanding SME loans.
The JSCCIB also discussed fund flows, as they are driving the baht up.
Jane Namchaisiri, president of the Federation of Thai Industries, said the private sector was quite concerned about the rapid appreciation of the baht from the capital inflows because exporters cannot quote new prices in US dollars to buyers overseas.
“We can accept it if the baht starts appreciating from economic fundamentals, but the baht’s movement right now is reflecting the short term of capital inflows and buyers abroad are not allowing sellers to adjust prices.
“We are closely monitoring the impact of the baht’s strengthening on the export sector. But the JSCCIB believes the Bank of Thailand is also keeping a sharp eye on the situation,” he said.
The JSCCIB has left its forecast of the Thai currency for this year unchanged at 36.20 against the US dollar.
The JSCCIB believes the central bank’s Monetary Policy Committee will maintain the policy interest rate at 1.50 per cent at its meeting today, he added.
Yesterday, the Thai Credit Guarantee Corporation (TCG) signed an agreement with 17 financial institutions for SMEs’ start-up and innovation credit guarantee, while extending SME guarantees to Bt20 million for 10 years as an enticement for banks to extend credit.
Nitid Manoonporn, president of TCG, said the corporation had also adjusted its credit-guarantee conditions including reducing the credit-guarantee fee for lower costs of business operators and more flexibility for banks.
By the end of the current year, TCG expects to have provided up to Bt1 billion in assistance to operators.

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