KBank offers assistance measures for SMEs Farmers
The current rice-pledging program has had repercussions for SME operators as their farm business customers have been unable to repay debts; KASIKORNBANK therefore introduces a three- to six-month grace period for principal repayments with new loans to boost liquidity for SME customers. The Bank’s SME advisory teams were deployed to assist customers at place of business.
According to Mr. Patchara Samalapa, Executive Vice President of KASIKORNBANK, farmers under the rice pledging program suffering from a cash shortage, as they have not been paid by the government on time; are causing repercussions for related SME businesses including distributors of fertilizers, chemical products, grains, and agricultural machinery, as well as machinery rental providers. In April of each year, farmers will take on fertilizers, grains, chemical products and machinery from SME operators and be given payment terms of between three to six months. Last year, farmers were scheduled to repay these SME businesses by October after they were paid from the rice pledging program. However, due to the prolonged problems with the program, farmers have lack of cash to repay their debts accordingly or even for agricultural products for plantation of the new season. Consequently, these entrepreneurs have been impacted from being unable to get trade receivables paid.
Although the impacts are not seen as very severe at present, as most SMEs used their existing capital to repay the Bank, but some have showed signs of late payment. If this situation continues, they may lack working capital and eventually have fewer business transactions or even cease investments in waiting for the present circumstances to be resolved.
Mr. Patchara added that KBank is of the view that the delay of payment to farmers under the rice pledging program will soon bring about increased impacts on these SME businesses. The Bank, accordingly, has deployed its teams to closely monitor the provision of assistance measures to aid SME customers, with a grace period for loan principal repayment of between three to six months; in order to maintain liquidity for these businesses. Moreover, new loans will be available for customers selling agricultural production factors including distributors of fertilizers, chemical products, and agricultural machinery and equipment, as well as agricultural service providers.
KBank’s SME customers who may be affected from the rice pledging program total around 4,537, representing an outstanding balance of 13.68 billion Baht, or 2.75 percent of the Bank’s total SME loan portfolio. They are mainly located in the northeastern part of Thailand and are providers of fertilizers and agricultural chemical products, or are in the milling businesses. Since October 2013, when the rice pledging program problem started, KBank has granted new loans of approximately 1.03 billion Baht to SME suppliers in the agricultural sector. The Bank expects that the assistance measures will provide temporary liquidity for customers until the problem of the rice pledging program is resolved.
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