Thailand banks break the ice: Freezing loan rates to thaw financial stress

Thailand’s state-run banks have taken a bold step to counteract high interest rates by freezing their loan rates. This move has been initiated to assist low-income earners and small to medium-sized enterprises (SMEs), as disclosed by Vitai Ratanakorn, who holds dual roles as president and chief executive of the Government Savings Bank (GSB).

The GSB, which currently services six million loan customers, has undertaken this measure in collaboration with the government.

The Bank of Thailand’s Monetary Policy Committee had previously escalated its benchmark interest rate to 2.5%, marking a ten-year high. This occurred last Wednesday, and it was a quarter-point increase. GSB’s future loan rate hike will hinge on the speed and robustness of deposit rate increments, according to Vitai. He expressed concerns about a rapid rise affecting the bank’s margin.

Moreover, the director and acting president of the Government Housing Bank (GH Bank), Krit Sesawet, stated that the bank is geared up to keep its loan rates unaltered until the year’s end.

This strategy is aimed at lessening the impact of monthly instalment payments for customers, allowing them the necessary time to accommodate the increased interest rate.

This aligns with the government’s debt assistance initiatives, he affirmed. GH Bank currently has a customer base of 1.79 million loan customers, with outstanding loans accounting for over 1.66 trillion baht.

Elaborating further on this subject, Narthanaree Rattapat, the president of the Small and Medium Enterprise Development Bank of Thailand, said that as a state-run financial institution supporting small businesses, the bank has chosen to freeze interest rates for all loan types.

This is to mitigate their financial burden and provide SMEs with a sufficient window to manage their businesses effectively. The bank’s minimum retail rate is set at 8.05% per annum, while the minimum lending rate stands at 7.05% per year, reported Bangkok Post.

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