Small and Medium Enterprise Development Bank of Thailand (SME D Bank) is ready to help reduce customers' debt and interest burden to improve their liquidity, allowing their businesses to continue operating, says president Nartnaree Rathapat.
Ms Nartnaree said SMEs have suffered from dwindling cash flow as the economy slows.
She cited one case where an SME borrowed 10 million baht from the bank and could initially repay the debt because it had monthly sales revenue of around 1 million baht. But during the economic slowdown, the firm's sales dropped to 100,000 baht per month, which eroded its debt repayment ability.
If SME D Bank did not reduce the debt and interest burden for this customer, its status would have changed from good credit to a non-performing loan (NPL), said Ms Nartnaree.
The bank also helped 14,000 SME customers restructure debt worth 26 billion baht between January and August this year, in line with the Bank of Thailand's recommendations.
She said the bank has tried to keep loan interest rates steady against the backdrop of rising rates.
The bank's average loan rate is 5%.
Many banks raised their fixed deposit and loan interest rates after the Bank of Thailand raised the policy rate by 0.25 percentage points on Sept 28 to 1%, in an effort to tame the high inflation rate.
Some of these banks have kept their lending rates unchanged for retail customers to help them avoid the impact of the hikes.
Ms Nartnaree said once SME D Bank has improved its core banking system by 2024, it will apply for a licence from the central bank to provide money deposit services, which should reduce its cost of lending to SMEs.
Before the Bank of Thailand awards such a licence to SME D Bank, the regulator needs to vet the bank's stability and check that its capital adequacy ratio is at least 8.5%.
SME D Bank has a capital adequacy ratio of 14%, while its NPLs stand at 14 billion baht, or 13% of its total outstanding loans.
The bank expects its NPLs to fall to 13 billion baht by the end of this year, she said.
