Aug. 14--State banks must "fast-track" their lending procedures to help support the economic recovery, according to Deputy Finance Minister Pradit Phataraprasit.

Industry groups have complained that private and state banks have been slow to approve new loan requests or have denied applications altogether due to fears of loan losses amid the economic recession.

But policymakers are concerned that a defensive stance by local banks will only exasperate the economic downturn, as companies, particularly small and medium-sized firms, are starved for credit and liquidity.

Mr Pradit yesterday met with leaders of six state banks, as well as representatives of the Federation of Thai Industries, the Thai Chamber of Commerce and tourism groups.

He said state banks, which include the Government Housing Bank, the Government Savings Bank, the SME Bank, the Islamic Bank, the Bank for Agriculture and Agricultural Co-operatives and the Small Credit Guarantee Corporation, must not only speed up their lending procedures but should also ease loan terms for borrowers.

The new "fast track" programme will be ready for implementation by the end of the month, Mr Pradit said.

"In an economic downturn such as we have today, access to credit is critical, even more important than low interest rates or eased loan terms," he said.

State banks should focus more on a company's long-term business prospects and potential rather than its immediate balance sheet, particularly for companies in industries such as tourism.

Mr Pradit said banks should even look past companies that are in default so long as their core operations and business potential remain solid.

The six state banks in the first half approved only 300 billion baht in new loans, less than half of their official target of 625.5 billion. Actual disbursements were significantly lower at just 100 billion baht.

The ministry has not only directed state banks to accelerate lending, but has also raised their loan targets for the full year to 927 billion baht.

Mr Pradit said each state bank could submit claims to the ministry for financial support if it incurs costs as a result of the fast-track programme under the public service account (PSA) system.

The PSA system is an accounting programme that the government plans to use to help identify the costs of policy initiatives incurred by state agencies.

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