Pichai to urge banks to approve more loans for small businesses

Finance Minister Pichai Chunhavajira urges banks to ease loan criteria and support small businesses. He calls for increased lending, lower interest rates, and relaxed loan-to-value ratios to boost economic growth and financial accessibility.

Deputy Prime Minister and Finance Minister Pichai Chunhavajira announced on Monday that he will soon meet with the Thai Bankers’ Association to encourage commercial banks to approve more loans for small businesses.

Call for Easing Loan Criteria

Pichai urged commercial banks to ease their strict loan approval criteria, allowing more funds to flow into the economy and stimulate growth.

He acknowledged that banks are cautious about lending to small businesses due to concerns that potential non-performing loans (NPLs) could impact the overall economy and major debtors. However, he emphasised that banks do not need to approve loans for all small businesses, but rather focus on those with the capacity to repay their debts.

“Banks should not shut the door on all small businesses,” Pichai said. “The best way to inject money into the system is to approve loans.”Banks Expected to Support Economic Growth

Pichai pointed out that the government has already supported commercial banks by reducing their Financial Institutions Development Fund (FIDF) contribution rate from 0.46% to 0.23% of their profits. He argued that, in return, banks should contribute to economic recovery by granting more loans to small businesses.

He noted that commercial banks collectively reported a profit of 200 billion baht, which he described as excessively high given the current state of the Thai economy.

“Banks should play their part in supporting the country by increasing loan approvals,” he added.Loan Accessibility and Interest Rate Adjustments

Pichai highlighted that Thailand’s banking system holds approximately 18 trillion baht in loans, with banks enjoying a 3% net interest margin. This results in borrowers paying 500 billion baht in interest to banks.

To improve financial accessibility, Pichai has directed the Government Savings Bank to issue small loans ranging from 10,000 to 20,000 baht to 300,000 borrowers, including vendors who have never previously received bank loans.

As the economy recovers and investment increases, Pichai called on banks to offer more low-interest loans, particularly to medium and small businesses, rather than limiting favourable loan conditions to large corporations.

He also urged banks to ease their loan-to-value (LTV) ratio requirements to improve access to financing for a wider range of borrowers.

Government’s Debt Relief Efforts

The finance minister also noted that the government has restructured debts for approximately 100,000 borrowers, settling outstanding debts of 5,000 baht or less to provide them with greater financial freedom.

(2025/03/03-00:00)