Bank of Thailand Urges Increased Lending Amid Economic Easing

The Bank of Thailand is urging financial institutions to expand lending efforts amid ongoing economic easing. The central bank's governor, Vitai Ratanakorn, stated that following a recent policy rate cut of 25 basis points to 1.25%, the regulator expects improved loan growth to support the country's sluggish economic expansion.

The Monetary Policy Committee's unanimous decision to cut rates brings the total reduction this year to 1 percentage point. The central bank aims to alleviate the financial burden on vulnerable borrowers, particularly small and medium-sized enterprises, or SMEs, which have seen loan contractions for 13 consecutive quarters.

To support this, the central bank is collaborating with the Finance Ministry to implement a new 100 billion baht credit guarantee scheme, aimed at both SMEs and larger corporate borrowers, with limits of up to 100 million baht and 150 million baht per company, respectively.

This scheme will focus on industries aligned with the Reinvent Thailand initiative, such as tourism, agriculture, and logistics. In response to the policy rate cut, major banks like Kasikornbank and Krungthai Bank announced reductions in their minimum lending rates, with Kasikornbank lowering its overdraft rate to 6.44% and Krungthai Bank reducing its overdraft rate to 6.37%.

Siam Commercial Bank's CEO, Kris Chantanotoke, indicated readiness to support the government's economic measures, including the credit guarantee scheme, while Bangkok Bank's president, Chartsiri Sophonpanich, noted the need to adjust business strategies amid anticipated GDP growth of less than 2% next year.