Latest news with #NationalCreditGuaranteeAgency
Bangkok Post
11-07-2025
- Business
- Bangkok Post
Bill aims to enhance credit guarantees
The draft National Credit Guarantee Agency (NaCGA) Bill mandates that all financial institutions contribute to a credit guarantee fund in exchange for a guarantee system that reduces their lending risk. According to Deputy Finance Minister Paopoom Rojanasakul, every financial institution providing credit to companies or businesses will be required to contribute to the credit guarantee fund established under this law. He said the fund will be sourced from three channels: government contributions, contributions from financial institutions, and fees collected from entrepreneurs requesting credit guarantees. Mr Paopoom said the government does not intend to set high contribution rates. The purpose of the fund is to build a higher-quality credit guarantee system, which should reduce the risk borne by financial institutions. Though the contributions made by institutions will account for only one-third of the fund, they should benefit significantly from reduced lending risks, he said. The exact contribution rate from financial institutions has yet to be finalised, but it is expected to be set at a very low level, said Mr Paopoom. The ministry held discussions with financial institutions regarding their contributions to the fund prior to the drafting of the law to gather feedback on the pros and cons. As with any legislation, there are winners and losers, but the key is to assess the overall national benefit, he said. This system represents a vital enhancement of the country's financial capacity, said Mr Paopoom. The draft aims to reform the current credit guarantee system operated by the Thai Credit Guarantee Corporation (TCG), making it easier for entrepreneurs to access loans. A survey revealed that 40% of the country's 3.2 million small and medium-sized enterprises (SMEs) still face difficulty in accessing credit through formal financial systems. The draft stipulates financial institutions must contribute to the NaCGA fund, which will serve as a source of funding for credit guarantee operations. The government's contribution is estimated at 10 billion baht, while entrepreneurs also pay guarantee fees. The draft requires financial institutions to contribute to the fund at a rate not exceeding 0.3% of the total outstanding business loans of commercial banks and specialised financial institutions. The effective rate will be issued later via a ministerial regulation, said Mr Paopoom. The credit guarantee fee charged by NaCGA is based on the individual risk profile of each entrepreneur, unlike the current portfolio-based fee system that does not reflect the specific risk of individual loans. Under the new model, the agency assesses the credit risk of each loan application requesting a guarantee. Once approved, the entrepreneur can use the guarantee certificate to apply for a loan from a financial institution. The scope of NaCGA will be broader than that of TCG, he said, able to guarantee loans from commercial banks and non-bank financial institutions, as well as guarantees for debt instruments or asset securitisation. However, this does not include equity instruments or loans provided by other businesses involved in capital sourcing, as determined by the policy committee, and excludes equity or equity-like instruments. NaCGA may also guarantee loans provided by other funding-related businesses, as determined by policy directives, excluding equity or quasi-equity instruments. This broader mandate is designed to better address the liquidity needs of entrepreneurs. Entrepreneurs eligible for guarantees from NaCGA are not limited to SMEs, as other types and sizes of businesses may also qualify, as defined later by the board of directors. The agency can also propose plans directly to the cabinet in urgent cases where there is a need to support entrepreneurs or promote credit access in alignment with government policy goals, such as the development of strategic sectors or the national economy. Beyond improving SMEs' access to formal credit and reducing reliance on informal funding sources, NaCGA is expected to serve as a stabilising mechanism in times of economic volatility, particularly during crises marked by a high level of risk and uncertainty in the financial system, said Mr Paopoom.
Bangkok Post
06-07-2025
- Business
- Bangkok Post
Ministry keen to press financial bills
Despite ongoing political uncertainty, the Finance Ministry appears poised to push forward three key financial bills. According to Deputy Finance Minister Paopoom Rojanasakul, the three drafts are an amendment to the National Savings Fund Act, the Financial Hub Bill and the National Credit Guarantee Agency (NaCGA) Bill. The draft amendment to the National Savings Fund Act allows the National Savings Fund to issue a "retirement lottery", aimed at attracting more people to save. This bill is expected to be presented for its first reading in parliament on July 16. The Financial Hub Bill is designed to attract foreign investors and financial businesses, stimulate domestic economic activity and enhance financial skills among the local workforce. This bill was already reviewed and finalised by the Council of State and is expected to be submitted to the cabinet for approval on Tuesday. Once approved by the cabinet, it will be forwarded to parliament for deliberation. According to Mr Paopoom, the draft NaCGA Bill is expected to be submitted to the cabinet on July 8 or July 15. This legislation is meant to improve access to formal credit for small and medium-sized enterprises by allowing NaCGA to assess lending risks and provide credit guarantees to financial institutions. He said everyone involved in the process must continue to perform their duties because the country faces many obstacles that need to be resolved, including economic problems and border-related challenges. All ministries must continue to progress with their work. Regarding the Entertainment Complex Bill, which was already approved by the cabinet, the government aims to submit it to parliament during the upcoming legislative session this month. However, Mr Paopoom said the draft still requires a detailed review before it can move forward. "We can't afford to stop. Everyone must cooperate to ensure Thailand continues to move forward, both economically and in resolving border issues," he said. "We are trying to push through as many items in the pipeline as we can. There are no delays, with 2-3 draft laws heading to parliament." Last week, three major private sector groups expressed growing concern over political instability, urging the government to ramp up efforts to rebuild trust and confidence among the public and businesses. The Joint Standing Committee on Commerce, Industry and Banking is preparing to hold discussions with the Bank of Thailand, the National Economic and Social Development Council, the Finance Ministry and the Commerce Ministry to re-prioritise economic strategies, given limited resources. The focus is on stimulating the economy over the next 6-12 months.
