Mr. Paopoom Rojanasakul, Deputy Minister of Finance of Thailand, stated that the cabinet has approved the National Credit Guarantee Agency (NaCGA) formation bill to support Small and Medium Enterprises (SME) accessing capital. After passing the cabinet, this bill will be sent to the Council of State for further review.
Mr. Paopoom pointed out that the NaCGA is a federal agency but it is not a state-owned enterprise or civil service. The agency’s duty is to evaluate the risk and guarantee credit for civilians who borrow from financial institutions, Specialized Financial Institutions (SFIs), and Non-Bank.
The process begins when the individual contacts NaCGA to request for a guarantee to help them in borrowing money from the financial institution. The agency will then assess the entrepreneur’s credit risk, both personal risk and risk-based pricing through a database and credit risk simulation model created from the financial and non-market data.
Once the process is finished, NaCGA will provide a letter of guarantee to the individual who must pay a small charge based on risk level due to the support of the government sector and the financial institution.
The individual with the letter will receive the loan from the financial institution more easily as NaCGA already guarantees some or all the risk. If the individual cannot make the repayment, the agency will bear the risk from the institute, according to the conditions they agree to.
Moreover, since the bill stated that the government agency and the private sector must transfer data to NaCGA for a credit simulation model, the agency’s database will be turned into national data infrastructure as it contains various essential domestic business information.
NaCGA’s source of funds came from several sectors, including the government’s support fund, guarantee credit fees, and the financial support from the commercial bank and SFIs with set proportion according to the arrangement. These funds will allow the agency to not become dependent on the government budget.
Mr. Paopoom stated that the Ministry of Finance values capital access and the expansion of business capability, especially SMEs. The formation of NaCGA is considered as the construction of a new investment ecosystem in the Thai business sector, which will support and advance the private sector’s competitiveness.
