Bangkok: The Cabinet has approved the establishment of the National Credit Guarantee Agency (NaCGA), which is set to merge with the SME Bank within one year. Deputy Finance Minister Paopum Rojanasakul announced that the Cabinet has green-lighted the draft National Credit Guarantee Agency Act, aimed at supporting SMEs and small entrepreneurs in accessing capital. The draft will now proceed to the Council of State for review before being submitted to the House of Representatives for consideration. The bill is expected to pass in time for the current government's term.
According to Thai News Agency, the SME Bank will serve as the operational core of NaCGA, with an initial capital of approximately 10 billion baht sourced from the budget or state bank funds. NaCGA, while a government agency, is neither a government agency nor a state enterprise. It will provide risk assessments and credit guarantees, allowing individuals seeking loans to undergo credit analysis and receive guarantees from NaCGA. Loan applicants will pay a fee determined by their risk level.
Applicants must submit a risk assessment form to their chosen bank, which will decide on loan approval based on the individual's risk profile. In cases of bad debt, the bank may seek compensation from NaCGA. Compensation will come from three sources: government allocations, fees paid by applicants, and financial institutions.
The operation of NaCGA allows prospective loan seekers to obtain credit guarantees before applying for loans. NaCGA will evaluate credit risk using its database and models based on financial and alternative data. Applicants will pay a small, risk-based fee for the credit guarantee, which can then be presented to financial institutions when applying for loans. Financial institutions are expected to approve loans more readily due to NaCGA's role as a guarantor, sharing credit risk according to specified terms.
The Ministry of Finance is focused on improving access to capital and enhancing business capacity, particularly for SMEs. The establishment of NaCGA aims to refine the government credit guarantee system and foster a new financial ecosystem for Thai businesses, enhancing competitiveness in the private sector.