August 8, 2024
The Bank of Thailand (BoT) is encouraging financial institutions to support small and medium-sized enterprises (SMEs) in transitioning to sustainable business practices.
Speaking at a central bank seminar on Wednesday titled “Financing the Transition”, deputy governor Ronadol Numnonda said as part of the sustainable finance transition, the regulator plans to implement the second phase of Thailand’s taxonomy in the fourth quarter this year, focusing on four industries: manufacturing, agriculture, waste management, and building and construction.
The bank implemented the first phase last year, emphasising a transition for two sectors: energy and transport.
In the second phase, the regulator wants banks to pay greater attention to SMEs transitioning towards sustainability and adhering to environmental, social and governance (ESG) standards, in line with international norms.
“We want banks to assist SMEs in transitioning from existing brown businesses to less-brown businesses,” said Mr Ronadol.
“This would help SMEs improve business efficiency and strengthen competitiveness in a changing global economic landscape.”
The Financing the Transition programme involves the central bank collaborating with eight commercial banks: Bangkok Bank (BBL), Krungthai Bank, Kasikornbank (KBank), Siam Commercial Bank (SCB), Bank of Ayudhya (Krungsri), TMBThanachart Bank (ttb), Kiatnakin Phatra Financial Group and UOB Thailand.
These eight banks offer sustainable product programmes tailored to the needs of SMEs, featuring special interest rates and attractive loan conditions.
BBL, the country’s largest lender by total assets, launched the “Bualuang Green Financing for Transition to Environmental Sustainability”. This initiative supports customers in three core areas: greenhouse gas emission reduction, climate change transition, and pollution reduction.
The bank allocated 10 billion baht for this loan project, offering loan periods of up to eight years at special rates.
KBank focuses on four industries for sustainable finance: auto parts, packaging and plastics, food and beverage, and hospitality. The bank granted 94 billion baht in sustainable finance in 2023 and aims to provide 100 billion this year, while targeting 200 billion by 2030.
SCB plans to grow the value of its sustainable finance portfolio to 150 billion baht by 2025, with loans already totalling 110 billion, notably in the hospitality sector.
Krungsri supports local SMEs in shifting to sustainable finance by offering both financial and non-financial assistance, including the establishment of the Krungsri ESG Academy to train SMEs on sustainability.
In addition, ttb expanded its green and blue loans to a total of 30 billion baht, with 5 billion in sustainable-linked loans and US$210 million in green and blue bonds.
Source: Bangkok Post