Thailand’s biggest commercial banks agreed to temporarily lower borrowing costs for vulnerable groups and small businesses, following an appeal by Prime Minister Srettha Thavisin earlier this week. 

The lenders will slash the minimum retail rate (MRR) for loans by 25 basis points for six months, the Thai Bankers’ Association said in a statement Thursday (Apr 25). The MRR for loans ranges from 6.5 per cent to 9 per cent among Thai commercial banks.

The decision to lower borrowing cost came days after Srettha met chief executives of Bangkok Bank, Siam Commercial Bank, Kasikornbank and Krung Thai Bank. 

Srettha turned to the top lenders after the central bank held its benchmark rate steady at a third straight meeting on April 10, ignoring calls by the premier to slash borrowing costs from a decade high 2.5 per cent. The prime minister and Bank of Thailand governor Sethaput Suthiwartnarueput have clashed over the policy approach to revive South-east Asia’s second-largest economy, which has grown at a slower pace than regional peers.

The central bank said on Wednesday holding rates provided its policy options to deal with unexpected global and domestic challenges. 

The reduction in loan rates will ease the burden on borrowers struggling to cope with high interest rates and is in line with the government and central bank’s policy to revive the economy, the association said. 

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Srettha thanked the banks for easing the rate, saying the move will throw a lifeline to individuals and small businesses to manage their funds better during the six-month relief period. The government will find other measures to ease the financial burden on other groups of borrowers.   

Most state-owned banks in Thailand have held loan rates steady even as the central bank lifted borrowing costs by a total of 200 basis points during a yearlong tightening cycle. BLOOMBERG