SMEs loans complications eased by Finance Ministry’s new AMC

The Thai Finance Ministry has scheduled the establishment of a new asset management company (AMC) for next month. This move aims to provide relief to beleaguered retail borrowers, especially small and medium-sized enterprises (SMEs), by assisting them in clearing non-performing loan (NPL) statuses and embarking on a fresh financial journey.

The collaborative effort between Government Savings Bank (GSB) and Bangkok Commercial Asset Management Plc (BAM) is expected to bring relief to many small Thai businesses currently in the red.

The AMC’s formation is a strategic move to handle the NPLs more efficiently, according to Finance Minister Pichai Chunhavajira. He pointed out that state banks often have to write off retail NPLs, which results in low book values for these debts. By transferring them to the AMC, the aim is to manage these debts more effectively, said Pichai.

“The collaboration with BAM on an AMC will significantly enhance the debt management system.”

He expressed confidence that the restructuring of these debts through the AMC would not result in a loss, but instead, provide a much-needed financial reset for affected customers.

GSB President Vitai Ratanakorn disclosed that the AMC will be a 50:50 joint venture between GSB and BAM. GSB is set to transfer non-performing loan debts worth 40 billion baht, encompassing around 400,000 accounts, into the AMC for management.

A lifeline

Each account’s debt to be managed by the AMC will be capped at 20 million baht, Vitai said.

“This joint venture will be considered a subsidiary of both BAM and GSB, which will help expedite debt management.”

However, he further noted that the establishment of the subsidiary is contingent on approval from the boards of both organisations.

In parallel efforts to alleviate the burden of smaller-scale debtors, Pichai announced the Finance Ministry’s readiness to prepare a 10 billion baht fund for loans, designated to clear the debts of those who owe minor amounts, thereby removing them from the blacklist and allowing them to start repaying the state over two to three years.

Pichai explained that more than one million retail debtors at state-owned specialised financial institutions, each with an average debt of 10,000 baht, have defaulted and are currently listed as NPLs by the National Credit Bureau.

The new AMC and the financial aid for smaller debtors mark a significant step by the Thai government to tackle the issue of NPLs and provide a lifeline to individuals and SMEs alike, enabling them to regain financial stability and contribute to the economy without the burden of debt, reported Bangkok Post.