BANGKOK (NNT) – The Bank of Thailand (BoT) has decided not to extend a general order to suspend debt repayment by SMEs to commercial banks set to end this October 22, instructing the institutions to consider such aid on a case by case basis instead, to protect the sector from long term impact.
BoT assistant governor for financial stability and strategy Roong Mallikamas, explained why the measure assisting SMEs with a credit line of no more than 100 million baht was not being continued, pointing out that of the 1.05 million eligible accounts, worth a combined 1.35 trillion baht in debt, up to half have indicated an ability to resume debt repayment after October 22. Of the total, 950 billion baht of the debt is owed to commercial banks.
The concern is that while most of the businesses can now continue payments, an extension of the assistance measure could impact the long-term stability of financial institutions. The central bank is also worried that SMEs not affected by COVID-19 will take advantage of the measure and lose fiscal discipline. Use of the measure is estimated to wipe away 200 billion baht from commercial banks each year if maintained.
For businesses still genuinely impaired by the situation, banks will be allowed to consider their plight on a case by case basis and offer them help as needed.
