BOT explores credit guarantees SMEs to improve access to bank loans

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Assistant Governor Suwannee Jatsadasak highlighted that the central bank is looking into models from countries like Japan and Taiwan, where SMEs benefit from more extensive credit guarantee packages.

The Bank of Thailand is exploring the introduction of credit guarantee schemes for small and medium-sized enterprises (SMEs) to improve their access to bank loans.

Assistant Governor Suwannee Jatsadasak highlighted that the central bank is looking into models from countries like Japan and Taiwan, where SMEs benefit from more extensive credit guarantee packages. These models, which share benefits and risks between businesses and financial institutions, require less government budget support.



Banking data from 2023 shows a slight contraction in bank loans by 0.3% compared to the previous year, with SMEs experiencing a more significant reduction in loan access. The contraction in loans for SMEs with credit lines under 500 million baht reached 5.1% in the third quarter, following a 5.5% decrease in the preceding quarter. This trend reflects the challenges SMEs face in securing financing, partly due to banks’ increased caution amid economic uncertainties.



The BOT also observed a rise in SMEs’ non-performing loans (NPLs) to 6.66% in the fourth quarter from 6.64% in the third quarter of 2023. Additionally, there was an increase in demand among SMEs for unsecured loans, including credit cards and personal loans. In response, the National Economic and Social Development Council (NESDC) suggested the central bank reconsider the minimum payment requirement for credit card debts to alleviate some pressure on SMEs.



After reducing the minimum payment ratio for credit card loans to 5% during the pandemic, the central bank increased it to 8% this year, with plans to restore the original 10% requirement next year. Discussions are ongoing with the NESDC to find a balance that considers the impact on cardholders and the long-term financial burden on borrowers. (NNT)