The Bank of Thailand has expressed concern over rising financing costs for micro-SMEs (small and medium-sized enterprises), as more businesses turn to nano-finance loans amid tighter access to traditional bank credit.
According to the edited minutes of the central bank’s Monetary Policy Committee (MPC) meeting released on Wednesday, members noted that funding costs for micro-SMEs are increasing as borrowers rely more heavily on high-interest lending products.
Central bank data showed that outstanding nano-finance loans reached 94.5 billion baht as of January, representing year-on-year growth of 56%.
The MPC raised questions about whether the trend reflects existing borrowers facing higher credit risk, which could limit their access to conventional loans, or an expansion of lending to new customers who previously depended on informal sources of financing.
The MPC secretariat reported that most borrowers taking high-interest loan products are new clients. This trend reflects a strategic shift by some commercial banks seeking to broaden their customer base through micro-finance and nano-finance offerings.
The minutes noted that micro-SMEs borrowing through these channels are typically charged interest rates close to the regulatory ceiling of 28–33% per year, while existing borrowers generally continue to pay rates similar to previous levels.
Given these developments, the committee said it will continue to monitor credit conditions and the transmission of monetary policy. Targeted financial assistance, including credit guarantees under the “SMEs Credit Boost” programme, is expected to help vulnerable borrowers.
Although bank interest rates have declined following earlier policy rate cuts, funding costs for micro-SMEs remain relatively high. The MPC attributed this to both the increasing use of high-interest loans and the relatively elevated credit risk associated with this borrower group.
At the same time, overall bank lending has continued to contract, largely due to weaker borrowing demand from large corporations amid slowing investment and ongoing economic uncertainty. Financial institutions have also remained cautious in extending credit to new borrowers and higher-risk segments, particularly SMEs and vulnerable households.
The quality of SME loans has also deteriorated. While the non-performing loan (NPL) ratio declined in the fourth quarter of 2025, the reduction was partly due to year-end balance sheet adjustments by financial institutions.
Looking ahead, authorities will need to closely monitor the quality of SME and housing loans, as NPL ratios in both segments remain elevated, the minutes said.
Kasikorn Research Center (K-Research) expects the impact of policy rate cuts on lending rates to become more evident this year. Interest rates across the banking sector have gradually declined over the past 18 months, reflecting the central bank’s monetary easing cycle.
According to K-Research, borrowers are likely to see clearer benefits from lower interest rates in 2026, supported by policy rate cuts implemented at the end of 2025 and again last month. These reductions are expected to gradually filter through the financial system over the course of the year.
The think tank estimates that about 71% of outstanding business and retail loans will enter a lower-rate adjustment period, potentially reducing interest burdens for households and businesses by 14–14.7 billion baht.