Mr. Veerathai Santiprabhob, Governor of the Bank of Thailand (BOT) revealed that the BOT is preparing to propose various measures for the Cabinet (Cabinet) to approve in principle on April 7, aimed at mitigating the impacts of the COVID-19 pandemic, including:

1. Issuing an Emergency Decree to establish a special soft loan program directly for SME operators using BOT funds, which is larger than the loan program from the Government Savings Bank that assists small SMEs.

Mr. Veerathai stated that the BOT has previously collaborated with commercial banks to present various measures, which have focused on retail customers by allowing them to defer principal and interest payments for a period. There is also a separate set of measures for SMEs, but due to the uncertainty of the COVID-19 pandemic, which is likely to expand, it is necessary to extend support measures for larger SMEs by allowing them to defer principal and interest payments and providing new liquidity loans to assist those lacking working capital and to help businesses navigate through the crisis.

2. Issuing an Emergency Decree to create a safety net for the private debt securities market to ensure its continued operation, based on measures from central banks in several countries. This decree will empower the BOT to purchase maturing private debt securities to pay off existing securities, specifically those from high-quality companies, provided that they raise at least half of the funds from the private market to ensure that the private debt securities market can function normally, with screening conditions to ensure they are reputable companies.

Mr. Veerathai emphasized that a strong financial system is a crucial pillar for the economy to continue functioning, but it must be ensured that the financial market operates normally. The Securities and Exchange Commission (SEC) and the BOT are jointly considering important mechanisms to help maintain the private debt securities market, which currently amounts to 3.5 trillion baht, compared to commercial bank loans totaling 14 trillion baht.

Meanwhile, holders of private debt securities include a diverse range of individuals and organizations, such as mutual funds, savings cooperatives, the Government Pension Fund (GPF), social security funds, and bond funds. Additionally, many businesses rely on borrowing through the debt securities market, which is currently affected by the global debt securities market and economic uncertainties, causing the private securities market to not function as it typically would, necessitating support measures.

3. The BOT will extend the deposit protection period, which was originally set to decrease from 5 million baht to 1 million baht in August 2020. The Deposit Protection Agency has proposed extending this period for another year to maintain deposit protection at 5 million baht until August 2021, to help alleviate public concerns.

4. The BOT will allow financial institutions to reduce their contributions to the Financial Institution Development Fund from the original rate of 0.46% to 0.23% over a period of two years, to lower costs for financial institutions, which is hoped to lead to reduced interest rates for the public.

 

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