The state-run Small and Medium Enterprise Development Bank of Thailand (SME Bank) has offered a 50% debt haircut for debtors who failed to make payments under the Ua-arthorn low-cost taxi scheme.

The hefty debt forgiveness is for both principal and unpaid interest, said president Mongkol Leelatham.

He said 291 borrowers who defaulted on 106 million baht in loans under the Ua-arthorn low-cost taxi scheme have reached agreements with the bank on debt restructuring. Some 714 debtors who borrowed a combined 302 million baht under the scheme have defaulted.

SME Bank is rescheduling the debt with monthly payments of up to 10,000 baht, Mr Mongkol said.

The 4.5-billion-baht Ua-arthorn taxi programme was initiated in 2003 to let taxi drivers own their own vehicles. Drivers bought the vehicles on hire-purchase contracts without a down payment and paid 12,000 baht in monthly instalments at 3.5% interest.

SME Bank lent 700-800 million baht under the scheme. Mr Mongkol said a higher number of taxis took a toll on the debt-servicing ability of borrowers.

The bank has been saddled with hefty bad loans in recent years due to imprudent lending, especially to government projects. Its bad loans peaked at 50% of total loans in 2013.

SME Bank is one of seven financially ailing state enterprises required by the State Enterprise Policy Commission to undergo business rehabilitation.

Mr Mongkol said the bank has 21,000 retail borrowers who owe it less than 1 million baht. The bank's NPLs amount to 23 billion baht, of which 1 billion are retail loans.

In a bid to reduce its NPLs, the bank plans to negotiate with debtors who defaulted on restructuring this year to avoid putting assets used to back the troubled loans under the hammer. For large debtors, he said the bank had taken 200 NPL debtors with a combined debt of 9 billion baht to court.

Source:
courtesy of BANGKOK POST

by Wichit Chantanusornsiri

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