GSB to launch loan scheme for poor
Bank targets poverty in Greater Bangkok
The state-owned Government Savings Bank (GSB) plans to seek approval soon for a multibillion-baht loan project to address the poor’s indebtedness and economic disparity.
The bank plans to extend the loan through its People’s Bank project, deposits for loan products and a lending scheme guaranteed by the Thai Credit Guarantee Corporation (TCG), GSB president Chatchai Payuhanaveechai said yesterday.
The GSB will charge lower interest rates than loan sharks, he said, adding that the People’s Bank scheme now imposes a rate of 0.5% to 0.75% per month, far below the 10% a month of underground lenders.
The bank is mapping out details for the loan to eradicate poor households’ indebtedness and economic disparity.
Deputy Prime Minister Prawit Wongsuwon recently instructed the GSB to propose measures to solve the poor’s financial problems within two weeks.
The government plans to use the GSB to solve the financial problems of the poor in the Greater Bangkok area, while the Bank for Agriculture and Agricultural Cooperatives, another state-run bank, will help those who live in rural areas.
The GSB is among the country’s leading banks by deposits and lending.
As of the end of September last year, the bank’s deposits amounted to 1.95 trillion baht or 13% of the country’s deposits. Its loans outstanding totalled 1.8 trillion baht, representing 12.1% of the country’s loans outstanding.
Non-performing loans (NPLs) stood at 1.37% of its total loans at the end of September. Its loan-loss provision coverage ratio was at 134.4%.
The GSB aims for its lending and deposits to grow 1.5 times the level of GDP growth this year, which is deemed to be not too aggressive.
The bank forecasts economic growth of 4% in 2015.
In the meantime, the state-owned Small and Medium Enterprise Development Bank of Thailand (SME Bank) has appointed Lt Gen Pissanu Puttawong as an expert on good governance to give advice on governance and transparency and promote anti-corruption measures.
SME Bank chairwoman Salinee Wangtal said it would be difficult for the bank’s next executives to set any conditions favourable to their groups if a good system had already been put in place.
The bank has been saddled with hefty bad loans in recent years due to imprudent lending, especially to government projects.
Its bad loans stood at 31.6 billion baht or 37% of outstanding loans as of Jan 31.
The bank’s bad loans fell by 3.49 billion baht from June last year, the first month when the current executives took power. NPLs will fall further after the bank’s board approved hiring a subsidiary of Srisawad Power to collect the loans.
In January alone, the bank lent 1.93 billion baht to 1,000 borrowers, well above the 400-500 million baht extended each month last year.
The bank’s new loans reached almost 2 billion baht last month even though it limited lending to 15 million baht per borrower.