KBank credit lines for SME flood victims

Small and medium-sized enterprises (SMEs) suffering from the flood are expected to need credit lines of 65-140 billion baht to recover.

Both state-owned banks and commercial banks should cover the loan requirement, said Pakorn Partanapat, executive vice-president of Kasikornbank.

There are around 240,000 SME operators affected by the flooding in the 32 affected provinces, and SMEs contribute tens of billions of baht per month to the country's gross domestic product.

Building, property, retail, agriculture, automobiles and electronics were the hardest hit sectors, said KBank.

Initially, KBank has prepared a combined credit line of 15 billion baht to support its SME customers affected by the floods, with 5 billion from the bank's own funding. 

The remaining 10 billion is expected to be financed from the Small Business Credit Guarantee Corporation (SBCG) under the government's SME loan scheme, he said.

The cabinet has approved 120 billion baht worth of loans to assist flood-hit SMEs through SBCG, with fixed interest rates of 3% per year for the first three years. SBCG, an agency controlled by the Finance Ministry, will offer loan guarantees of up to 30% of the SME's loan portfolios of local banks to encourage lending.

Mr Pakorn added that the bank would participate in the government's SME soft-loan programmer, which will be financed by the Government Savings Bank at an extra interest rate of 0.01% per year.

SME operators will receive a fixed interest rate of 3% for the first three years under the programmer.

KBank has the largest SME portfolio in the industry, with typical debt outstanding of 430 billion baht, accounting for a 30% market share. 

Despite an expected slowdown of SME's loan expansion in the fourth quarter, working capital will still be needed for business rehabilitation after the floodwater recede.

The bank is expected to book an SME loan portfolio of 440 billion baht by year-end in line with its projections this year.

"We will consider assistance measures and customers' ability to repay debt on a case-by-case basis," he said.

Despite the floods, the country's SME loan growth is expected to be around 7% this year after rapid growth of 13% in the first half of the year.