High demand for GSB soft loan scheme reaching 80 billion baht

A government-administered soft loan scheme through the Government Savings Bank (GSB) has seen significant initial interest, with demand reaching 70-80 billion baht out of a total of 100 billion baht, according to Finance Minister Pichai Chunhavajira.

During the signing ceremony for the memorandum of understanding for the GSB Boost Up scheme aimed at supporting small and medium-sized enterprises (SMEs), Pichai revealed that 16 participating commercial banks reported high interest in the loans offered under the scheme.

The GSB’s soft loan initiative provides loans to commercial banks at an interest rate of 0.01%. These banks are then required to lend to SMEs at an interest rate not exceeding 3.5% for the first two years. After this period, the interest rate will be set by each bank.

Pichai emphasised that this project is designed to enhance the liquidity of SMEs that are currently experiencing financial constraints.

In previous efforts, the government implemented schemes to help restructure debts for SMEs that were classified as non-performing loans, with a current focus on boosting liquidity, said Pichai.

“SMEs are vital to the national economy, contributing 35% to GDP and accounting for 70% of employment in the system.”

He further highlighted that SMEs play a critical role in driving the economy but are currently facing challenges such as high operational costs and limited liquidity.

GSB president Vitai Ratanakorn explained that the soft loan project is a versatile financial solution for SMEs, which can be utilised for investment or to enhance business liquidity, excluding refinancing.

The maximum loan amount per borrower is set at 40 million baht, with an interest rate capped at 3.5%, aiming to reduce financial burdens for SMEs.

This interest rate, offered through participating commercial banks, is the lowest available for SMEs in the current market.

Vitai also mentioned that the soft loan project, where the GSB lends to commercial banks at an interest rate of 0.01%, does not receive financial backing from the Finance Ministry.

Nevertheless, the GSB is likely to lose the opportunity to make a profit from this money because if the 100 billion baht were placed in the repurchase market, it would earn an interest of 2.5% as Vitai added, reported Bangkok Post.