BANGKOK, Thailand – The chairman of the Bank of Thailand (BOT), Dr Somchai Sajjapongse, has expressed disappointment over the slow progress of proposed legal reforms, the lack of effective measures to revive lending to small and medium-sized enterprises (SMEs), and unanswered questions surrounding efforts to curb illicit money flows.
Somchai, who took office on June 2, 2025, said he had intended to make the central bank more efficient, transparent and accountable, while modernizing laws to keep pace with rapid changes in the financial system, technology and innovation.
However, he said he was disappointed that proposed amendments to key legislation, including the Bank of Thailand Act, the Financial Institution Business Act and the Currency Act, had made little progress. Although the BOT board had instructed executives at its first meeting in June 2025 to study and propose necessary changes, only one section of the Financial Institution Business Act had been put forward for amendment after 18 months. He described the lack of progress as a failure that could harm Thailand’s financial and economic system.
Somchai also highlighted the prolonged contraction in commercial bank lending to SMEs, which he said had recorded negative growth for nearly 17 consecutive quarters. He described Thailand as the only country in ASEAN to have experienced such a prolonged decline.
The BOT had cited several initiatives to address the problem, including Your Data/Open Data, a Data Bureau and an SME Credit Portal. Somchai said these had yet to materialize, while businesses continued to struggle and disappear. Two other programs, SME Credit Boost and SME Secure+, had been introduced and were designed to address obstacles to lending. However, he said their loan volumes were not yet sufficient to demonstrate that the wider contraction in SME credit had been reversed. “These measures are necessary, but not sufficient,” he said, questioning whether the central bank had enough tools to tackle the problem.
He acknowledged that improving SME access to finance required cooperation among multiple agencies, including the Finance, Industry and Commerce ministries, commercial banks, specialized financial institutions, the Thai Credit Guarantee Corporation and the Office of Small and Medium Enterprises Promotion.
Somchai said banks often cited the higher risks associated with SMEs and a lack of reliable business information when explaining their reluctance to lend. However, he questioned whether some lenders were applying overly restrictive criteria, delaying applications with excessive conditions or excluding entire SME sectors despite the presence of viable businesses.
He also criticized what he described as a disparity in lending rates, with SMEs that secured loans sometimes facing interest charges higher than their actual risk warranted, while large businesses received comparatively low rates. He argued that this could allow banks to earn excessive returns from smaller businesses while favoring larger corporate borrowers. He further questioned whether commercial banks were directing too much of their deposits towards large corporate loans and investments in bonds and equities, while placing excess liquidity in the BOT’s repurchase market.
On measures to curb illicit financial activity, Somchai said the effectiveness of existing controls also remained uncertain. Although the BOT had reported that cash withdrawals subject to the measures fell by more than 57% and physical gold withdrawals declined by over 85% compared with January 2026, he cautioned that the figures did not necessarily prove illicit transactions had been eliminated.
He raised the possibility that some individuals could be splitting transactions into smaller amounts to remain below reporting thresholds, a practice known as “structuring”.
Somchai noted that the Anti-Money Laundering Office had previously documented cases involving deposits and withdrawals divided into amounts below reporting limits, including transactions spread across multiple linked accounts. He stressed, however, that this evidence confirmed the existence of structuring in the financial system but did not establish that it caused the reported declines in cash and gold transactions. The reductions could reflect both the genuine cessation of transactions and changes in how they were conducted.
