Soft loans may exceed Bt30 bn: Pradit

Pradit promised businesses that the Small and Medium Enterprise Development Bank of Thailand (SME Bank) would be able to launch soft credits by mid-December.

He said the available package for small businesses could exceed Bt30 billion, as the ministry wants to prevent a sharp economic downturn.

Governments worldwide are pumping liquidity into economies as a global recession has become a major threat now that the US financial crisis has spread to other parts of the world.

Pradit is working on the details of the softloan package, under which the SME Bank would extend credit to commercial banks.

Commercial banks would offer promissory notes to the SME Bank, after which their borrowers could get loans via the state institution. Banks would have to bear the full lending risk, said the minister.

Pradit plans in the next few days to submit the plan to Finance Minister Suchart Thadathamrongvech.

He said the ministry might recapitalise the SME Bank by Bt2 billion. Other funding sources would also be sought, such as the issuance of government bond or direct borrowing from other financial institutions.

The ministry would set the interest rate for the soft loan later, he added.

On another matter, Pradit said it was possible farmers would pledge more than 8 million tonnes of rice, the target set earlier by the government.

The low price of rice will likely encourage farmers to participate in the scheme aimed at shoring up prices, he said.

Pradit said the Bank for Agriculture and Agricultural Cooperatives would borrow Bt110 billion from Krung Thai Bank, the Government Savings Bank, TMB Bank and Siam City Bank at an annual interest rate of 4.95 per cent for the ricepledging scheme. The government has guaranteed the loans.

Farmers might pledge up to 10 million tonnes of rice with the government, he added.