Plea to cut rates for TCG plan

Plea to cut rates for TCG plan

Finance permanent secretary Somchai Sujjapongse has asked banks to cut interest rates for startups and innovative small and medium-sized enterprises (SMEs) whose loans are guaranteed under a new scheme.

Somchai: Bid to stimulate economy

The Thai Credit Guarantee Corporation (TCG) scheme, with coverage of 50% for loans that turn sour, can lower banks' risks dramatically, he said.

Mr Somchai also urged participating banks to accelerate loan approvals to startups and SMEs as a means to stimulate the economy amid tepid private investment and consumption dented by lack of confidence.

State-owned TCG yesterday inked cooperation agreements with 17 financial institutions to provide a credit guarantee service to allow startups and innovative SMEs to gain better access to financial sources, said president Nitid Manoonporn.

TCG will offer credit guarantees of up to 1 million baht to SMEs and individual operators who have been in business for no more than three years. If startups and SMEs are registered as juristic entities, they will be entitled to receive credit guarantees of up to 5 million and 20 million baht, respectively.

The agency offers non-performing loan coverage at only 18% of SME loans under its traditional portfolio guarantee scheme.

It imposes an annual fee of 1-2% of the guaranteed amount, well below the 2.5% charged to startups under the credit guarantee scheme launched last year. The government will shoulder the first year's annual fee.

Mr Nitid estimated that TCG will provide credit guarantees worth 1 billion baht under the scheme by year-end and the programme will be available until Dec 31, 2017.

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