Cabinet approves law to establish NaCGA to boost SME finance

Deputy Finance Minister Paopoom Rojanasakul said after the meeting that the draft legislation would be forwarded to the Council of State for further consideration.

NaCGA will be established as a state agency responsible for assessing risk and providing credit guarantees for loan applicants. Once approved, borrowers can present a “credit guarantee certificate” to commercial banks, state-owned specialised financial institutions, and non-bank lenders.

Paopoom outlined the process as follows:

• Entrepreneurs apply to NaCGA for a credit guarantee.
   
• NaCGA assesses applicants’ credit risk using financial and alternative data models.
   
• NaCGA issues a credit guarantee certificate, with applicants paying a low fee based on their assessed risk.
   
• Entrepreneurs present the guarantee to banks when applying for loans.
   
• Banks issue loans, with risks mitigated by NaCGA’s guarantee.
   

Beyond its guarantee function, NaCGA will also serve as a key data infrastructure for the country. Under the law, both state agencies and private organisations will be required to submit data for use in credit modelling, thereby building a new financing ecosystem for businesses.

Paopoom added that NaCGA’s funding sources would be sustainable, comprising three main elements: government subsidies, guarantee fees from entrepreneurs, and contributions from commercial banks and state-owned financial institutions. 

This model, he said, would help reduce the government’s fiscal burden.