BOT to Offer Banks Incentives to Restructure Debt for SMEs

​Fazzaco learned that Bank of Thailand (BOT) is intended to launch a new scheme that provides banks with incentives to restructure loans for SMEs, struck by Covid-19, micro enterprises in particular. 

Reportedly, the new incentive scheme is panned to come into effect after the two-month debt holiday initiative that started in July terminates. And businesses are allowed to join, even though they have taken advantage of the debt holiday programme.

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The scheme encourages banks to restructure SME debt, including reducing loan principal, cutting interest rates and extending loan’s due dates. Whereas, under the debt holiday, payments are suspended but interest continues to rise. Hence, debt restructuring can help lower a borrower’s overall debt through principal haircuts and interest rate reductions.

Currently, the BOT is partnering with commercial banks on how the incentives will work. One possibility is to cut down the amount of capital banks are required to set aside for NPLs (Non-performing Loans).