LOANS LIKELY TO GROW IN SECOND HALF

       Lending by banks would likely pick up in the second half after a Bt212-billion drop in the first seven months of the year, Bank of Thailand (BOT) deputy governor Bandid Nijathaworn said.
       The loan market would possibly improve in the second half of the year in keeping with economic recovery, as the export and agricultural sector would expand seaฌsonally in the fourth quarter.
       Manufacturers would expand investment to accuฌmulate stock while the govฌernment's spending would help drive demand for loans of the real sector particularly in construction, he said after a quarterly meeting with the Thai Bankers' Association.
       "If the economy picks up in the second half, demand for loans will also pick up, especially working capital," said the deputy governor.
       He said the improved loan marฌket would be beneficial to the entire economy as well as the real sector, particularly smallandmediumsized enterprises (SMEs), which have seen a sharp decline in lending over the past seven months.
       The banking system's loans fell Bt212 billion or 3.68 per cent over the past seven months compared with the end of last year. It was the result of a drop in demand for credit folฌlowing the economic slowdown and commercial banks' tightening of loan approvals.
       Bandid said month-on-month lending has contracted at a slower pace, primarily marking the neutral pace in August, which indicated rising demand for loans.
       The loans have contracted on a yearonyear basis. Whether they would expand in the rest of the year would depend on how the economy would pick up.
       "The economic recovery and improving business confidence would be positive factors for the loan market as liquidity and regulation are not obstacles," he said.
       Many banks have projected that the demand for loans would increase largely in the fourth quarter of the year. The demand would be from the export sector as it would benefit from the global economฌic recovery, and from the agricultural sector.
       Meanwhile, the central bank has asked the banks to encourage SMEs to join the government's creditinsurance scheme worth Bt30 billion after the government approved to relax rules such as fee reduction.
       The central bank has played the role of intermediary between crediฌtors and debtors to expand debt maturity.
       It has encouraged banks to provide information, such as domestic and global economic data to SMEs to enable them make business decisions.
       "SMEs give importance to the market and industry outlook. If the banks provide information, it will be beneficial to SMEs," said Bandid.