Small businesses have been a major beneficiary of recent government efforts to extend financial and technical support to help improve the overall competitiveness of the country's industrial base.
Many banks, spurred on by regulatory easing, have also turned to small- and medium-sized businesses (SMEs) as a major segment for growth.
But John Meinhold, vice president for the financial institutions group at consultancy A.T. Kearney, cautions that without careful management, lending to SMEs could raise the risks of declining asset quality in the future.
He noted that SME lending was a key driver for growth among Thai banks. But the relatively higher risks taken from small business lending also reinforced the need for careful credit analysis and monitoring.
In 1998, SMEs represented some 66% of total non-performing loans (NPLs) in the banking sector, but the proportion fell to 57% in 1999 and 49% in 2002.
