Loans from the government-initiated People's Bank scheme, which is run by the GSB, have dropped from Bt20 billion-Bt30 billion two to three years ago to Bt6 billion, due mainly to repayment by borrowers, while new loans have hardly increased, according to Goanpot Asvinvichit, the GSB's director-general.

There's talk that loan sharks have been busy lately, so the bank plans to extend more personal loans in some communities to replace the underground loans, he said.

The bank's credit scoring efficiency is being improved to support more prudent lending.

Although People's Bank loans have fallen, about Bt700 million of the outstanding loans are non-performing.

Most of these have been in default for two to three years.

The bank might write off all of the Bt700 billion in bad loans or just some of them.

"The bad assets representing 10 per cent of lending arose over the past two to three years when lending through this scheme was as high as Bt20 billion-Bt30 billion. So far, there has been some debt repayments on the performing loans, while bad debts still hang on," he said.

Over the first six months of the year, the bank's loans and deposits were about the same as in the first half of last year, which should lead to a net profit in the first half of around Bt6 billion. The bank's net profit for the entire year is likely be around Bt12 billion, which is close to last year's performance.

The bank still has Bt30 billion in excess liquidity so it sees no need to boost deposits at this time.

Meanwhile, to celebrate the 60th anniversary of His Majesty the King's accession to the throne, the bank will give away 600,000 commemorative piggy banks.

New customers depositing at least Bt900 will get this special piggy bank together with a special Bt10 coin. This promotion starts on Monday.