Banks offer no-interest appliance loans

A presenter poses with an air-conditioning unit that can save energy bills.

Five government and commercial banks have begun offering interest-free loans, repayable over 12 months, for customers purchasing energy-saving electrical appliances.

The loans are financed by a Bt1-billion Energy Ministry programme aimed at encouraging consumers to change out old electrical equipment that consumes too much electricity for new appliances with energy-consumption label No 5.

The campaign focuses on air-conditioners and refrigerators but also covers other appliances. Those buying new air-conditioners or refrigerators with the interest-free loans will be obliged to destroy the old appliances and send photographs of the wreckage to the Energy Ministry. This condition does not apply to other appliances or electrical equipment.

The banks who will lend the government funds are the Government Savings Bank (GSB), the Bank for Agriculture and Agricultural Cooperatives (BAAC), Krung Thai Bank (KTB), Bank of Ayudhya (BAY) and Bangkok Bank (BBL).

The banks will cooperate with electrical-equipment stores for payment, while customers will not need to offer cash or down payments.

Applications for the loans will be accepted for the next 18 months, and after approval customers will have 12 months to repay the loan principal, interest-free.

Air-conditioners purchased under the scheme are limited to 18,000 British thermal units, and the ceiling for loans will be Bt30,000. For other kinds of electrical equipment, including refrigerators and energy-saving fluorescent lamps, the loans will be limited to Bt10,000 each.

The GSB is the only bank that will allow walk-in applications for loans to buy any kind of energy-saving equipment at any branch. After selecting the equipment, customers must obtain an application form, either from the bank or its website, www.gsb.or.th. The shop-owner must sign the form, which can then be submitted to a nearby branch of the bank. Upon approval, the bank will issue a cheque for the customer to buy the equipment.

The GSB plans to recommend the loans to its good-credit mortgage customers. Walk-in customers or bank staff will need a good-credit guarantor.

The BAAC will offer the loans only for its customers who have a good credit history or receive salary payments via the bank. They will also need a personal guarantee or collateral, such as a deposit account, along with property assets. The bank's Taweesin saving certificates may also be used as collateral for 80 per cent of the value.

Customers can also select electrical equipment from the BAAC's Agricultural Marketing Cooperatives, located in each province, or at the shops that the bank guarantees.

KTB will also limit its lending to salary-payroll customers but will provide the service at each branch.

BBL is offering the quickest way for getting the loans, because it will lend only to customers via its credit cards. Therefore, people who want a household energy-saving loan from BBL must first apply for a credit card. However, borrowers can buy only Saijo Denki-brand air-conditioners and not other kinds of electrical equipment.

BBL executive vice president Ruchanee Nopmuang said the bank might offer the loans for a greater variety of appliances later but

that only Saijo Denki air-conditioners were available now.

Saijo Denki International managing director Somsak Chittipalungsri said the company was offering super-hybrid air-conditioners, which saved 40 per cent of the energy used by other brands, for Bt26,900, which was Bt12,000 lower than the regular price.

BAY is not offering the loans to individual customers. It plans to deal with corporations that consider the loans beneficial to their employees, and interested employees can apply for the loans via their company.

Tinnakorn Boonyakalin, senior vice president and manager of KTB Personal Loan Products Department, said participating banks would receive a management fee from the Energy Ministry. Every two months, all of the banks will meet with ministry officials to share information and make debt-settlement payments.

"First, each bank will receive Bt200 million from the ministry, and every two months we'll meet and the banks will have to return all of the money paid by customers over the previous two months," he said.