Prime Minister Srettha Thavisin has urged the country’s four biggest commercial banks to reduce loan interest rates for vulnerable groups and small businesses after the Bank of Thailand repeatedly ignored his calls to lower borrowing cost from a decade-high.
Mr Srettha on Tuesday met with chief executives of Bangkok Bank, Siam Commercial Bank, Kasikornbank and Krungthai Bank to make the case for reduced interest rates for borrowers struggling to cope with the high cost of funds.
The prime minister told reporters that the meeting was not meant to pressure banks but to request them to consider providing relief to vulnerable groups.
The meeting came after the central bank held its benchmark rate steady at a third straight meeting on April 10, ignoring calls by the premier to cut it by 25 basis points from 2.50%.
The premier and Bank of Thailand Governor Sethaput Suthiwartnarueput have clashed over the policy approach to revive the economy, which for years has underperformed its regional peers.
Mr Srettha said he also discussed general economic issues and the financial results of banks in the first quarter during the meeting attended by Arthid Nanthawithaya of SCB, Kasikornbank’s Kattiya Indaravijaya, Bangkok Bank’s Chartsiri Sophonpanich and Krungthai president Payong Srivanich.
“The government recognises the struggles of the people with rates,” he said, adding that the bank chiefs, whom he has known personally for 10 to 20 years, have promised to look into his request to ease borrowing costs.
Most state-owned banks held loan rates steady even as the central bank lifted borrowing costs by a total of 200 basis points during a year-long tightening cycle.
The sluggish growth outlook and government-central bank tensions have rattled foreign investors, prompting them to dump more than $3 billion worth of Thai bonds and stocks so far this year.
The baht has gone from being the best performer in Asia in the final quarter of 2023 to among the worst, so far this year after its 7.8% decline against the dollar.
The central bank expects economic growth to accelerate to 2.6% this year from 1.9% in 2023, with the administration set to begin its 500-billion-baht digital wallet stimulus programme in the fourth quarter.
The BoT has argued that some of the problems holding back growth are structural and can’t be addressed by monetary policy, while dismissing months of negative inflation as the result of state subsidies.