Thailand banks break the ice: Freezing loan rates to thaw financial stress

Thailand’s state-run banks have taken a bold step to counteract high interest rates by freezing their loan rates. This move has been initiated to assist low-income earners and small to medium-sized enterprises (SMEs), as disclosed by Vitai Ratanakorn, who holds dual roles as president and chief executive of the Government Savings Bank (GSB).

The GSB, which currently services six million loan customers, has undertaken this measure in collaboration with the government.

The Bank of Thailand’s Monetary Policy Committee had previously escalated its benchmark interest rate to 2.5%, marking a ten-year high. This occurred last Wednesday, and it was a quarter-point increase. GSB’s future loan rate hike will hinge on the speed and robustness of deposit rate increments, according to Vitai. He expressed concerns about a rapid rise affecting the bank’s margin.

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