Bangkok: The Bank of Thailand (BOT) is taking significant steps to enhance retail investors' access to credit by promoting the Government Savings Bank's retail lending model to other financial institutions. This initiative aims to provide loans for career development and improve access to formal financial resources for grassroots groups.
According to Thai News Agency, BOT Governor Vitai Ratanakorn recently witnessed the signing of a memorandum of understanding (MOU) between the Government Savings Bank and the Puey Ungphakorn Institute for Economic Research. The agreement focuses on addressing the challenges faced by retail investors who struggle to access capital. With BOT's prior assistance of up to 100,000 baht to 1.6 million accounts through the SAM, the central bank plans to help 500,000-800,000 individuals overcome debt issues. The lending landscape for SMEs has been challenging, with negative growth for 13 consecutive quarters, necessitating urgent intervention by the BOT.
In response, the BOT is designing a lending mechanism to assist retail customers. The Government Savings Bank's "Build Credit, Create Opportunity" program previously registered 2.5 million customers, but only 200,000 were approved for loans, with a maximum limit of 10,000 baht per customer. The analysis of customers with irregular incomes but repayment capability indicates a need for collaborative efforts to increase credit access. The BOT aims to extend this program to other banks, with confidence in the Government Savings Bank's ability to provide retail loans within three years.
Ms. Lapawan Chankrachang, Deputy Managing Director of the Government Savings Bank, highlighted that the "Build Credit, Create Opportunity" loan program had 2.5 million registrants, but creditworthiness evaluations prevented many from securing loans. The Puey Ungphakorn Institute for Economic Research has been tasked with studying and designing specific loan products to address this issue, aiming to increase capital access for these customers.
Dr. Somrasmi Chantrat of the Puey Ungphakorn Institute for Economic Research emphasized the need to study the behavioral data of the 2.5 million customers, particularly those who were denied loans, to develop suitable loan products. With up to 30 percent of Thai households lacking access to credit, many rely on informal loans, underscoring the importance of this initiative.