Krungthai Bank (KTB) has set an aggressive loan growth target for small and medium-sized subcontractors of 5 billion baht annually over the next two years, anticipating a significant boost from the government's 2-trillion-baht infrastructure plan.
The majority state-owned bank's loan portfolio for subcontractors working on government projects stands at 56 billion baht and is expected to rise to 66 billion by the end of 2015, senior vice-president Prasit Wasupath said without elaborating on the portfolio's prior track record.
Based on the government's seven-year plan, investment would average 300 billion baht a year.
The 2-trillion-baht borrowing bill, which would give the Finance Ministry the authority to finance megaprojects such as high-speed rail, will seek the Senate's final nod in the coming days.
The bill may hit a snag, however, as the opposition Democrat Party plans to take it to court.
With the massive investment, the government hopes the country will regain the economic momentum it lost during the first half of 2013.
KTB will focus on loans for small and medium-sized subcontractors next year through a joint effort with Thai Credit Guarantee Corporation.
TCG will provide credit guarantees to contractors securing loans from KTB for work on government projects at 30% of investment worth over a period of seven years.
KTB, the country's second-largest bank by assets, has launched its own credit guarantee programme for small and mid-sized subcontractors on state projects via overdraft loans, promissory notes and factoring services.
It is hoped that KTB's package under TCG's credit guarantee will spur business growth with greater opportunities offered by the megaproject plan. Under the new loan programme, KTB can approve a letter of guarantee within one day.
Shares of KTB closed yesterday on the Stock Exchange of Thailand at 20.50 baht, down 10 satang, in trade worth 1.36 billion baht.