State bank to help 2m vulnerable people
According to Vitai Ratanakorn, president of the state bank, the Ministry of Finance and the State Enterprise Policy Office (Sepo) have revised the bank's performance evaluation criteria.
Instead of focusing on maximising profits, the new metric is how effectively the bank can help people access formal credit. This approach aligns with the vision of transforming GSB into a social bank, he said.
Mr Vitai said a large number of people still have either no credit records with financial institutions or credit scores so low most conventional financial institutions cannot extend loans to them. If loans were granted to this group, he said interest rates would typically be very high, around 25-30%.
However, GSB can provide loans to this group at an interest rate of only 12%, said Mr Vitai, who is one of two shortlisted candidates to become governor of the Bank of Thailand. The other is Roong Mallikamas, a central bank deputy governor.
Lending to vulnerable groups carries a relatively high risk of default. Out of every 100 borrowers, 20 are estimated to become non-performing loans (NPLs), he said.
However, the remaining 80 would be recognised as having a credit record with the bank, enabling the bank to increase their credit limits the following year, said Mr Vitai.
While loan programmes for vulnerable groups can result in financial losses for the bank, he said the social bank model compensates for these losses with revenue generated from loans to large businesses.
A social bank is a business model where profits from commercial activities are used to subsidise social missions.
Mr Vitai said the challenge lies in gaining acceptance from stakeholders. For example, Sepo, which oversees state enterprises, must accept that this approach will reduce GSB's profits, he said.
Meanwhile, the Bank of Thailand, which regulates financial institutions, must accept the increased financial risk.
GSB must ensure its profits do not drop excessively. A decline of 3-4 billion baht per year is considered acceptable. The bank aims to maintain annual profits at around 20 billion baht, said Mr Vitai.
He said GSB aims to help 2 million vulnerable people this year, including 1 million who would normally be rejected by commercial banks, resolving small bad debts by partially forgiving them, as well as forgiving debts for around 500,000 borrowers who took out loans under the Covid relief programme.
With these efforts, such borrowers will no longer be classified as NPLs by the bank, said Mr Vitai.
GSB offers various types of social credit programmes, including credit-building loans for 'opportunity creation' for individuals with no credit history; job and career creation loans; back-to-school loans; and loans for grassroots and individual borrowers.
Roughly 620,000 individuals have received loans under these programmes as of May 2025.
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