State banks vow to keep up with battle on debt

State banks plan to continue to work with borrowers to contain bad debts, says Vitai Ratanakorn, president of Government Savings Bank (GSB).

GSB’s non-performing loans (NPLs) make up 2.6% of outstanding loans and have remained at this level for some time.

However, a group of borrowers needs the bank’s help to restructure their debts in order to prevent it from becoming bad debt, Mr Vitai said.

This group of borrowers peaked at 1.2 million a few years ago, declined to 550,000 last year, and is currently at 350,000, he said.

Chatchai Sirilai, manager of the Bank for Agriculture and Agricultural Cooperatives (BAAC), said the bank’s credit quality is beginning to rebound, with BAAC aiming to keep bad debts at a ceiling of 5.5% in the accounting years 2023 and 2024, down from 7.68% in 2022.

Mr Chatchai said this goal can be accomplished with three approaches: extending loans, debt restructuring and improving IT systems.

This year BAAC expects to extend new loans worth 50 billion baht to largescale entrepreneurs for their business expansion, which should help small farmers to produce more because they form a supply chain for large operators.

The bank estimates an incremental increase in BAAC’s loan extensions by 10 billion baht would reduce NPLs by 0.5%.

The pandemic in 2020-21 affected customers’ ability to repay debt, causing

‘‘Our credit quality is beginning to rebound, with BAAC aiming to keep bad debts at a ceiling of 5.5% in 2023 and 2024, down from 7.68% in 2022.

CHATCHAI SIRILAI Manager, Bank for Agriculture and Agricultural Cooperatives

the bank’s NPLs to rise to 12% of outstanding loans.

In its accounting year ending in March 2023, BAAC extended loans to the agricultural sector totalling 878 billion baht.

Loans increased by 30.5 billion baht and BAAC had a Bank for International Settlements ratio of 12.6%, exceeding the level set by the Bank of Thailand.

During the pandemic, BAAC rolled out measures to alleviate debtors’ financial distress, which included a debt repayment project that reimbursed interest to 3.36 million customers, as well as a debt reduction project for 467,965 customers.

BAAC also restructured 17.7 billion baht in debt owed by 82,490 farmers, entrepreneurs and agricultural organisations.