"According to the bank's experience with providing loans to SMEs, once the businesses grow, they nor-mally face an insufficiency of capital. Thus, the new service will assist them to expand their businesses

and strengthen the country's SMEs," he said, adding that the service is planned to start in the second quarter of next year.

The fund's period of investment is at least five years. However, the shareholding proportion in each SME would depend on each company's decision as the bank has not set any exact target. The amount of investment would be unlimited and could be expanded in line with customers' demand.

The funding service is part of the bank's K SME Care scheme. C represents capital, A advice, R research and marketing information, and E education and training.

Boontuck said the bank aimed to provide SME loans of Bt50 billion next year, a growth rate of 20 per cent. In 2006, the bank expects its SME loans to increase by 24 per cent, higher than its earlier target of 16 per cent.

The bank aims to boost fee income from SME loans by 40 per cent next year - up from 20 per cent this year - mainly through trade finance and cash-management services.

Currently, the bank's SME out-standing loans are around Bt260 billion, or 40 per cent of its total loan portfolio.

Non-performing SME loans are lower than 2 per cent.

Kasikornbank holds a 21-per-cent market share of overall loan products in the banking industry and is ranked number two behind the country's largest bank, Bangkok Bank.

"The bank has not set a target to be number one but we aim to increase market share to 30 per cent in 2008, with the assumption of lending Bt50 billion per year," Boontuck said.

He forecast SME loan competition among commercial banks would be greater next year because many

banks would focus mainly on such loan products because of their growth potential. The strategy is expected to concentrate on SME value-added loans, which will increase business potential overall.