Most borrowers ready to exit relief programme

The majority of borrowers who applied for debt relief measures will exit the scheme before it expires next month, with banks preparing to extend the measures on a case-by-case basis.

Surat Leelataviwat, executive vice-president of Kasikornbank (KBank), said there were about 100,000 small and medium-sized enterprise (SMEs) with a credit line below 100 million baht per customer that applied for the debt relief measures.

The bank surveyed 90,000 SME clients that entered the debt relief measures. Some 80% are expected to exit from the debt relief scheme after it expires in October.

About 80% of KBank’s SME clients undergoing a debt holiday have tried to pay interest in order to ease financial burden as much as possible, Mr Surat said.

The bank will also contact the remaining customers, roughly 6%, while about 400 SMEs, representing 0.5% of SME clients, need to close their businesses.

Mr Surat did not elaborate on the remaining portion of SME clients.

“The debt restructuring situation has continued to improve over the past four months,” he said. “The bank is ready to provide customers’ assistance after the debt relief programme ends, including a debt holiday measure.”

For KBank’s retail customers that entered the central bank’s debt relief measures, the total is about 400,000 customers.

Total debt amount under the central bank’s debt relief measures stood at 4.55 trillion baht or 31% of total outstanding debts in the banking sector worth 14 trillion baht as of June, according to Bank of Thailand data.

SME loans make up the largest portion at 49%, while 26% of SME lenders applied for a debt holiday, followed by retail loans at 36% and corporate loans at 14%.

Bangkok Bank vice-president Siridej Euangudomsin said that about 70% of the bank’s small-sized customers who entered the debt relief scheme are able to exit after October.

__ The bank is ready to provide assistance after the debt relief programme ends. SURAT LEELATAVIWAT

EXECUTIVE VICE-PRESIDENT, KBANK

The remainder need to continue to participate in the programme, with 50% of those customers wanting to safeguard against risk by continuing to stay in the programme.

Although SMEs’ non-performing loans are still rising amid the downturn, the ratio is manageable under the bank’s debt restructuring programme, Mr Siridej said.

“The bank plans to prolong debt holiday measures with a suspension of both principal and interest payment for another 6-12 months on a case-bycase basis after the central bank’s debt relief measures end in October,” he said.

The existing strong capital base of the overall banking industry will serve as a buffer against higher bad debts and loan-loss provision, Mr Siridej said.

Saowanee Thairungroj, president of the Association of Private Higher Education Institutions of Thailand, said the University of the Thai Chamber of Commerce (UTCC), in collaboration with the Bank of Thailand and the National Economic and Social Development Council, has proposed credit term regulation to the government to support the liquidity of SMEs.

A UTCC survey found that 96% of supply chain business is based on credit term transactions, with only 4% doing business under cash payment.

Given the coronavirus impact, the credit term of SMEs has been prolonged to 60-120 days and has significantly affected SMEs’ liquidity.