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BOT Board Urges Legal Fixes Amid SME Loan Contraction

BOT Board Urges Legal Fixes Amid SME Loan Contraction

Thansettakij•Economy•1h ago

Reader Briefing

The Chairman of the Bank of Thailand Board has criticized the slow pace of legal updates and the ongoing contraction of SME loans.

  • •Dr. Somchai Sajjapong, Chairman of the Bank of Thailand Board, took office on June 2, 2025.
  • •SME loans from commercial banks have contracted for nearly 17 consecutive quarters.
  • •Research from the Puey Ungphakorn Institute for Economic Research (PIER) indicates a misallocation of capital, with high-efficiency SMEs receiving only 20% of loans.
  • •Dr. Somchai Sajjapong noted that only one section of the Financial Institution Business Act has been proposed for amendment after 1.5 years.

Overview

  • •Dr. Somchai Sajjapong assumed the position of Chairman of the Bank of Thailand Board on June 2, 2025.
  • •Dr. Somchai Sajjapong expressed disappointment that only one section of the Financial Institution Business Act was proposed for amendment 1 year and 6 months after the Board's June 2025 resolution.
  • •Dr. Somchai Sajjapong warned that SME loans have contracted for nearly 17 quarters and questioned if commercial banks are using excessively strict criteria or denying loans to certain business groups.
  • •PIER research published August 21, 2026, found that over 75% of business loans in 2025 were concentrated among approximately 15,000 large businesses.
  • •PIER found that high-efficiency small SMEs pay an average interest rate of 7.8%, compared to 3.9% for large businesses.
  • •PIER research suggests that SME and medium-sized businesses pay interest rates higher than their actual risk levels, while large businesses and SiCorp pay rates lower than their risk levels.
  • •Dr. Somchai Sajjapong proposed that the Bank of Thailand increase supervision by randomly auditing loan denials from banks with abnormally high rejection rates.
  • •PIER proposed five guidelines to improve capital allocation, including reducing information gaps using alternative data and adjusting interest rates to reflect actual borrower risk.

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Key Entities

Person

Somchai Sajjapong(สมชัย สัจจพงษ์)
Chairman of the Bank of Thailand Board who took office on June 2, 2025.

Organization

Bank of Thailand(ธนาคารแห่งประเทศไทย)ℹ️
The central bank of Thailand responsible for financial stability and legal updates to its policies.
Puey Ungphakorn Institute for Economic Research(สถาบันวิจัยป๋วย อึ๊งภากรณ์)
A research institute (PIER) that analyzed capital misallocation in the Thai financial sector.
Ministry of Finance(กระทรวงการคลัง)ℹ️
An external agency proposed by Dr. Somchai Sajjapong to provide feedback on legal amendments.
Office of the Council of State(สำนักงานคณะกรรมการกฤษฎีกา)ℹ️
An external agency proposed by Dr. Somchai Sajjapong to provide feedback on legal amendments.
Office of the National Economic and Social Development Council(สำนักงานสภาพัฒนาการเศรษฐกิจและสังคมแห่งชาติ)ℹ️
An external agency proposed by Dr. Somchai Sajjapong to provide feedback on legal amendments.
SiCorp
A group of approximately 1,000 large businesses that hold about 2 in 5 of the large business loans.

Law

Financial Institution Business Act(กฎหมายธุรกิจสถาบันการเงิน)
A law under the responsibility of the Bank of Thailand that has seen slow amendment progress.

Policy

Your Data
A measure prepared by the Bank of Thailand that Dr. Somchai Sajjapong views as not yet producing concrete results.
Open Dataℹ️
A measure prepared by the Bank of Thailand that Dr. Somchai Sajjapong views as not yet producing concrete results.
Data Bureauℹ️
A measure prepared by the Bank of Thailand that Dr. Somchai Sajjapong views as not yet producing concrete results.
SME Credit Portal
A measure prepared by the Bank of Thailand that Dr. Somchai Sajjapong views as not yet producing concrete results.
SME Credit Boost
A necessary tool for addressing SME loan contraction, though deemed insufficient by Dr. Somchai Sajjapong.
Secure+
A necessary tool for addressing SME loan contraction, though deemed insufficient by Dr. Somchai Sajjapong.