Most loans being issued by the Small and Medium Enterprise Development Bank of Thailand (SME D Bank) are to increase liquidity, with only a few for investment as entrepreneurs are still concerned about the unclear political situation, according to president Nartnaree Rathapat.
She said that in the first half of this year, the bank issued loans amounting to 31 billion baht, and the level was expected to reach around 70 billion baht for the whole of 2023, slightly higher than the total of 68 billion baht last year.
The majority of loans issued during this period were to help increase SMEs’ liquidity as they weather the current economic slowdown, while loans for investments to expand and improve business are still limited as entrepreneurs are concerned about political uncertainty, Ms Nartnaree said.
As a result of the unclear political situation, particularly the composition of the new government, entrepreneurs are reluctant to invest because they still do not know what the direction of the new government’s policies would be, such as how much the minimum wage would be increased by and how entrepreneurs should adapt.
During the pandemic, the bank issued around 158 billion baht in loans to SMEs who lacked liquidity: 42 billion baht in 2020, 48 billion baht in 2021, and 68 billion baht in 2022.
Of the total, special mention loans, when borrowers fail to make payments within 30-90 days of the due date, were around 30 billion baht. Roughly half, or 16 billion baht, were borrowers who could partially repay their debts or not pay in full instalments. The rest were those who were overdue no more than three months, with non-performing loans (NPLs) expected to hit roughly 2 billion baht, representing around 2,000 borrowers, the majority of whom were in the retail business.
The bank has total outstanding loans of 100 billion baht, with NPLs at 11 billion baht.