TCG plan to hike SME credit access

TCG plan to hike SME credit access

The state-owned Thai Credit Guarantee Corporation (TCG) plans to extend its credit guarantee service for leasing and factoring offered by non-bank companies from this quarter, in a move to give small and medium-sized enterprises (SMEs) better access to finance.

"Offering credit guarantee services to non-bank financial institutions whose major customers are small operators will help increase opportunities for them to access financial sources," said president Nitid Manoonporn.

On Jan 5, The Royal Gazette announced TCG can provide its service to non-bank financial institutions for which commercial banks and/or specialised financial institutions hold a 51% stake.

The agency will soon talk with qualified non-bank financial institutions to offer them products and credit guarantee models, he said.

TCG managed to achieve its targets in 2017 for new credit guarantees and the number of new credit guarantee users.

Last year it approved 86.6 billion baht worth of credit guarantees, exceeding its 86-billion target, while the number of new customers doubled to 90,931.

Mr Nitid said 79,520 small SME operators were granted credit guarantee services under the second phase of the micro-entrepreneurs scheme, while another 7,480 were approved for the credit guarantee service under the portfolio guarantee scheme 6 (PGS6) and the revised PGS6.

With PGS6 guarantees starting slowly after being initiated in late 2016, the government raised the cap for non-performing loan coverage to 30% from 23.8%. Both the government and banks jointly subsidise an annual fee of 1.75% of the loan amount for four years to lure SMEs to apply for the credit guarantee, a tool that helps them more easily secure bank loans.

Under the higher NPL coverage scheme, TCG has taken full responsibility for up to 30% of soured SME loans under its credit guarantee portfolio, while lenders must shoulder the remaining NPLs.

The maximum guarantee amount under the revised PGS6 was capped at 40 million baht and the maximum guarantee period was 10 years.

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