Cabinet approves asset warehousing scheme to help debt-ridden businesses
The cabinet approved financial measures today (Tuesday), worth 350 billion baht, to help financially-troubled businesses overcome the impacts of the COVID-19 pandemic.
The financial package includes 250 billion baht in soft loans and 100 billion baht for “asset warehousing”, whereby debtors use their assets as collateral with the right to redeem or to rent their assets later on.
Bank of Thailand Governor Sethaput Suthiwartnarueput said today that, since the outbreak of COVID-19 early last year, financial institutions have managed to provide soft loans to businesses to the tune of 130 billion baht, out of a total of 500 billion baht set aside under the Soft Loan Act.
In order to help debt-laden businesses to get access to the soft loans, under the present depressed circumstances, he said that normal debt restructuring cannot ease the burden of the debtors and, hence, the need to amend the Soft Loan Act, to make it possible for them to receive soft loans via the asset warehousing scheme, worth a total of 100 billion baht.
The central bank has assigned financial institutions to screen debtors, who are unable to service their debts, for their potential to join the asset warehousing scheme, which will last 3-5 years, with the expectation that they will be able to recover financially.
To encourage financial institutions to join the scheme, the central bank has agreed to allow them to charge an interest rate of up to 5%, instead of just 2%, throughout the 5-year period of the scheme.
The bank assessed that it will take about five years for tourism-reliant businesses to recover to their pre-COVID-19 situation.
Mr. Chatchai Sirilai, managing director of the Government Housing Bank, said that he is concerned, however, that small businesses may not have access to the asset warehousing scheme, because of the unclear guidelines covering the revenue requirements for of small and medium- sized enterprises.