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 the approval of the draft National Credit Guarantee Agency Act, aiming to create NaCGA as a mechanism to aid small and medium-sized enterprises (SMEs) and small entrepreneurs in obtaining capital. The draft will be submitted to the Council of State for review and then to the House of Representatives for consideration, with expectations of passing during the current government's tenure.
According to Thai News Agency, the SME Bank will act as the core of NaCGA's operations, with the merger expected to be completed within one year. The initial capital for NaCGA will be approximately 10 billion baht, sourced from the budget or state bank funds. Although NaCGA will function as a government agency, it will not be classified as a government agency or a state enterprise. It will carry out risk assessments and provide credit guarantees, allowing individuals seeking loans to undergo credit analysis and receive guarantees from NaCGA. The applicants will pay a fee based on their assessed risk level.
The credit guarantee process involves NaCGA assessing the credit risk of entrepreneurs using its database and credit risk models, which incorporate financial and alternative data. NaCGA will issue a credit guarantee to loan applicants, who will pay a small, risk-based fee. The applicants can then present the credit guarantee certificate to financial institutions to apply for loans. If a loan applicant defaults, NaCGA will share the risk with the financial institution as per agreed terms.
The Ministry of Finance emphasizes the importance of improving access to capital and building capacity in the business sector, particularly for SMEs. The creation of NaCGA is expected to enhance the current credit guarantee mechanisms and establish a new ecosystem for business fundraising in Thailand, thereby promoting competitiveness in the private sector.