KRUNGTHAI BANK will next week begin offering Bt5 billion worth of soft loans with low interest rates to small and medium-sized enterprises with annual turnover below Bt500 million.
Udomsak Rojviboonchai, senior executive vice president and head of KTB’s business centre group, said the bank would offer two packages of soft loans. The first carries an interest rate of 3.75 per cent for the first year and the second an interest rate of 3.9 per cent for the first year. To qualify for the first package, SMEs are required to have collateral worth 30 per cent of the credit line of up to Bt55 million. For the second package, no collateral is required but the credit line is limited to Bt40 million.
Last year, the government has soft loan of Bt100 billion with the interest rate of 4 per cent per annum to help SMEs.
Thai Bankers’ Association previously has been reported that it called bank members to set up a soft loan combine of Bt10 billion with interest of 4 per cent per annum to help SMEs.
KTB wants to focus more on medium-sized enterprises with annual revenue not more than Bt500 million, and the attractive interest rate will help them reduce costs in order to compete with large enterprises, Udomsak said.
SMEs that apply for a KTB soft loan must use the money to improve cash flow or for new investment and not to refinance loans from other banks, he added.
The bank this year aims to increase its lending to SMEs with annual revenue not exceeding Bt500 million by 10 per cent, while overall SME loan growth is targeted at 7-8 per cent.
KTB has to be proactive in helping SMEs as their loans could go bad if the bank is too slow to help them, he said.
In the second half of last year, KTB set up a credit clinic to look after clients whose loans might become non-performing, under which it sends relationship managers to talk with customers and offer solutions.
Programmes for clients
“We want to keep the NPL rate below 3 per cent,” he said, adding non-performing loans currently accounted for 2.2 per cent of lending to SMEs.
For clients that want assistance in seeking markets, developing business models and structuring finance, the bank encourages participation in the Krungthai Modern Management for SMEs (KTB-MMS) programme.
For clients with the potential to become exporters, the bank has a “genius exporter programme”, which helps educate SMEs on the export market and on activities related to export, such as how to open letters of credit. After that the bank will consider lending to them, Udomsak said.
“We hope our lending in the export sector will grow by 5 per cent because of the ‘genius exporter programme’,” he said, adding the bank had suggested to SMEs in the auto-parts industry to prepare for the effects of high technology on the auto industry.
Recently, a giant automotive producer laid off staff through a voluntary retirement programme, though this is not expected to affect the auto-parts industry in Thailand immediately. KTB customers in auto part are okay because normally, they will received order from giant auto makers for two years, which even the auto maker will shift to high technology, sub-contract SMEs have time to adjust their production line to deal with the new technology, he said.