TCG wants amendments to extend loan guarantees to non-banks

Economy November 25, 2015 01:00

By Sucheera Pinijparakarn


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The Thai Credit Guarantee Corporation (TCG) has asked the Finance Ministry to amend regulations to facilitate loan guarantees to non-banks.

"Non-banks such as Srisawad Power want TCG to guarantee loans to their clients, and we consider that nano-finance should be guaranteed in order to help low-income people access lending in the financial system. We hope the regulation amendment will be known early next year," said Wichet Warakul, senior executive vice president of TCG.

Based on the assumption that the Thai economy will show recovery next year, the trend of non-performing loans guaranteed by TCG should improve as well.

The rate of NPLs is 8 per cent of TCG’s total loan-guarantee portfolio of Bt300 billion. He said the figure might climb but was not expected to reach double digits.

Yesterday, TCG and TMB Bank joined forces to offer loan guarantees to SME clients of TMB under a product called TMB Quick Trade.

TMB Bank has seen more trade-finance activities from small and medium-sized enterprises thanks to new criteria for credit guarantees by TCG, which the bank hopes will mean lending under TMB Quick Trade reaches Bt4 billion by the end of this year.

Even though income from trade finance this year will be lower than target in line with the slowdown of exports and imports, TMB Quick Trade, which was launched at the end of the first quarter, is showing greater demand, said Parnkae Nandavisai, head of international transaction banking.

She said TMB had about 5,000 SME clients involved in export or import, and the bank expects more than 200 will join TMB Quick Trade this year, resulting in loans amounting to Bt4 billion.

TMB Quick Trade provides working-capital loans to SMEs in the import-export sector. During the first half, loan demand was low because clients were waiting to see the government’s assistance scheme. When the government launched stimulus packages to help SMEs, demand for trade finance in the third quarter rebounded.

As part of the package, SMEs will receive a waiver of the annual guarantee fee of 1.75 per cent of the loan amount for the first year. They will pay 0.5 per cent for the second year, 1 per cent for the third year and 1.5 per cent for the fourth year to seventh years.

Parnkae said TMB Quick Trade offered a maximum credit line of Bt40 million.

She said TMB Quick Trade had bright prospects for next year because imports and exports should recover.

The new criteria for TCG guarantees will end in mid-2016, but the bank believes that the government will have new measures as long as SMEs are not strong enough.