Bank of Thailand (BOT) deputy governor Tarisa Watanagase said yesterday non-performing loans (NPLs) at specialised financial institutions (SFIs) that were derived from the past government's policies showed a high percentage-to-lending ratio, although they were low in terms of the actual amounts.

She said that after the central bank's examination of SFIs' balance sheets, some of them needed to increase loan-loss provisions or reduce NPLs. Thus, only some of them need to increase capital.

"The central bank has no authority to order these SFIs to increase capital. We only examined them and made recommendations for the Finance Ministry. So far, some SFIs have followed our suggestions, while some haven't," she said.

The deputy governor's comment came shortly after Deputy Prime Minister and Finance Minister MR Pridiyathorn Devakula commented that the SFIs should have the same provisioning requirement as commercial banks, to meet international standards. This prompted speculation of a huge recapitalisation among several SFIs that served the past government's policies.

These SFIs include the Small and Medium Enterprises Development Bank of Thailand (SME Bank), Government Savings Bank, Bank for Agriculture and Agricultural Cooperatives (BAAC), Government Housing Bank, Islamic Bank, Asset Management Corp, Thai Asset Management Corp, Export-Import Bank of Thailand, Secondary Mortgage Corp and Small Industry Credit Guarantee Corp.

The Finance Ministry earlier said average NPLs of these SFIs were around 10 per cent. Former Finance Minister Thanong Bidaya said earlier that he would like the NPL ratio of these SFIs reduced to less than 10 per cent within a few years.

The SME Bank's NPLs were recorded at more than 30 per cent.

The Government Savings Bank earlier reported its NPLs at around 3 per cent, and the NPLs of the People's Bank project were around 10 per cent.

However, Tarisa declined to name the SFIs that needed to increase their capital. She said SFIs' NPLs derived from normal operations were at a "normal" level but that those derived from government policies were high in the percentage of lending, although the amount was quite low.

Tarisa added that as agreed with the BOT, the BAAC had earlier adopted new criteria for measuring NPLs, because the nature of its borrowers' cash flow was quite different from that of general businesses. Earlier, she said the BAAC had implemented a weaker set of standards for measuring NPLs.

Pridiyathorn also said earlier that some SFIs did not follow

the suggestions of the central bank.