The Governor of the Bank of Thailand explains the reason why “banks do not provide loans”

The BOT Governor revealed that the reason why people cannot borrow money from banks, especially SMEs, is because of high risk and banks receive lower returns than their costs. He recommended using loan guarantees and expediting the promotion of the NaCGA law.

Dr. Setthaput Suthiwatnarueput Governor of the Bank of Thailand (BoT) Revealed at the BOT Econ Class on March 18, 2568 that access to credit in the financial institution system has slowed down. The reasons most people talk about are high interest rates, insufficient liquidity in the system, and high-risk borrowers.

However, the main reason why people are unable to borrow money or access credit from financial institutions is because the borrower's riskiness increases, making financial institutions reluctant to provide credit.

“What financial institutions prioritize in lending is not liquidity, but the risk of the borrower. For example, the average return on lending to SMEs by banks is 8-10%, but the cost is 11-13%, which is mainly due to the risk of bad debt or credit cost. Currently, we see that the outstanding debt of SMEs has increased significantly.”

Therefore, if we want to solve the problem of SME loans, we have to solve the risk. What will help is having a loan guarantee mechanism to reduce the risk of lending to commercial banks.

“The BOT is not complacent about the risks of SMEs. We are concerned about it. What will help is the loan guarantee. We are currently pushing for the National Credit Guarantee Agency (NaCGA) law to help guarantee loans for SMEs and reduce the risk of lending to commercial banks. This is a model that is also available abroad and we think it will help with loans sustainably.”

Source: Facebook Bank of Thailand – Bank of Thailand

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