BOT backs NCPO plan for collateral law on loans to SMEs
July 09, 2014 00:00 By The Nation
THE Bank of Thailand says it will support the National Council for Peace and Order's plan to launch business collateral laws that would help small and medium-sized enterprises gain access to capital.
“Previously, the NCPO invited the Thai Bankers’ Association [for talks], which asked the former to go ahead with this issue urgently,” BOT Assistant Governor Salinee Wangtal said. “SMEs will benefit the most.”
When banks cannot estimate an operation’s cash flow, a large amount of collateral is requested. She said that under current Thai law, there were severe limitations on what business collateral can consist of, mainly land, buildings and machinery. But under the proposed new law, such things as rental contracts, inventories and patents would be acceptable.
The planned law was initiated by the previous elected government, but it got bogged down after hearing from relevant parties including lenders, debtors, SMEs and the Justice Ministry’s Legal Execution Department.
The central bank urges debtors and credi-tors to appraise assets jointly with experts to find the proper value of collateral.