Thai Credit Guarantee Corporation (TCG) aims to provide loan guarantees to small and medium-sized enterprises (SMEs) worth 110 billion baht this year.
TCG’s 2018 credit guarantee amount is likely to be higher than last year, when financial institutions tightened their loan extensions for fear of rising soured loans, said TCG president Nitid Manoonporn.
The state-owned financial institution last year offered credit guarantees worth 88.6 billion baht, falling short of the 102 billion target.
TCG also said that it will offer the 110-billion baht credit guarantee to 99,300 SME operators, of which at least 73% are micro SMEs, he said.
There are 40 billion baht in credit guarantees available under the portfolio guarantee scheme (PGS) 6, which will lapse in June.
Given that PGS6 guarantees started slowly after being launched in late 2016, the government decided to raise the cap for non-performing loan (NPL) 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 attract SMEs to apply for the credit guarantee, a tool that helps them more easily secure bank loans.
Under the higher loss-sharing 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.
Mr Nitid said that TCG will soon ask the Finance Ministry to launch the 50-billion baht PGS7, under which conditions will be the same as for PGS6.
TCG expects to roll out the third phase of the micro-entrepreneur scheme worth 15 billion baht next quarter, while the 13.5-billion second phase is expected to be fully taken up in April, he said, adding that there are 2 billion credit guarantees leftover from the second phase.
TCG’s credit guarantee for the microentrepreneur scheme charges fees of 1-2% of the guaranteed amount and caps the credit guarantee at 200,000 baht per borrower per financial institution and 500,000 per borrower for all lenders.
At present, the outstanding credit guarantee for the micro-entrepreneur scheme stands at 15 billion baht, with 180,000 customers and 20% of the loan guarantee under the scheme having turned sour.
Commercial banks have been keen on extending loans to micro SMEs since TCG began providing credit guarantees to the sector, as evidenced by the fact that 70% of the scheme’s total clients are borrowers of these lenders, he said.
TCG plans to start providing a 2 billion baht credit guarantee service
for leasing and factoring offered by non-bank companies this year. The stateowned agency will offer a credit guarantee of up to10 million baht to each customer who seek loans from 12 non-bank firms, in which at least 51% is held by financial institutions.
Mr Nitid said that TCG also plans to reduce its reliance on the Finance Ministry’s compensation for credit guarantees over the next five years.
The Finance Ministry now compensates 12.5% of the 30% loss-sharing scheme to TCG, while the remaining 17.5% derives from its annual fee of 1.75% throughout the 10-year credit guarantee scheme.