The bill to establish the National Credit Guarantee Agency (“NaCGA”) aims to address the challenges faced by small and medium-sized enterprises (SMEs) in Thailand, with approximately 40% struggling to access credit due to factors such as insufficient collateral, unstable income, and inadequate credit history. While existing credit guarantee mechanisms, such as the Thai Credit Guarantee Corporation (TCG), are available, they are limited in scope and effectiveness. These systems do not consider the individual risks of businesses and apply uniform fees, which fail to meet the diverse needs of SMEs. Additionally, they do not extend to non-bank lenders or adequately address liquidity challenges.
This legislation seeks to create a more flexible and efficient credit guarantee system that directly supports SMEs. Unlike current models, NaCGA will use a risk-based pricing approach, where guarantee fees are adjusted according to the specific risks associated with each business, ensuring fairer terms. The Bill also proposes that NaCGA replace TCG and integrate the functions of the Small Industry Credit Guarantee Corporation (“SICGC”), thereby streamlining the credit guarantee process and enhancing access to funding. This transformation is viewed as essential for promoting financial stability and sustainability within the country.
This Bill establishes NaCGA, detailing its objectives, powers, and governance structure. It also provides for the integration of SICGC into NaCGA, eliminating redundancies in credit guarantee operations. The Bill has 132 articles with a comprehensive framework for governance, including provisions for data sharing with state agencies such as the Bank of Thailand and the Revenue Department to develop a credit risk model. This reform is designed to improve SME access to loans, support non-bank credit providers, and enhance the efficiency and stability of the credit guarantee system.
Establishing NaCGA to Boost SME Credit Access_Bangkok Global Law