THURSDAY, March 28, 2024
nationthailand

TCG proposes credit guarantees for small traders and One Tambon One Product

TCG proposes credit guarantees for small traders and One Tambon One Product

Thai Credit Guarantee Corporation targets Bt15 billion in guarantees for two projects for small traders and One Tambon One Product businesses.

"Based on the plan, we expect to be able to provide credit guarantees for about 50,000 retailers and 100,000 Otop operators and community enterprises," Wichet Warakul, senior executive vice president, said yesterday.

TCG has submitted a proposal to the Finance Ministry for Bt5 billion in credit guarantees for retail businesses and Bt10 billion for Otop businesses and community enterprises.

If approved by the Cabinet, the two projects will run from early next year to 2015. The country has 2.6 million small and medium-sized enterprises, of which 1.7 million are retailers, which frequently face problems accessing funding sources. TCG would charge a fee of 1-3 per cent of the guarantee, subject to each customer’s risk profile. This range is higher than normal, reflecting their high risk.

TCG will be jointly responsible for 25-50 per cent of the credit guarantee, if there is a default.

If the government is able to proceed with its Bt2-trillion infrastructure project as planned, TCG will provide credit guarantees for subcontractorswhich may be able to draw the full amount under their credit lines from financial institutions.

"If we provide credit guarantees for these contractors, we may have insufficient capital and will ask the Finance Ministry for a capital increase," he said. TCG’s registered capital is Bt6.7 billion.

In the first nine months of this year, TCG extended credit guarantees of Bt55 billion. Its outstanding credit guarantees reached Bt230 billion.

TCG expects to achieve its target of Bt84 billion in credit guarantees this year. Its profit is targeted at more than Bt200 million. Last year, it earned about Bt300 million.

"In the first nine months, we had total compensation of about Bt2.2 billion for credit defaults. Last year, our compensation was about Bt1.8 billion with total outstanding credit guarantees of Bt170 billion," Wichet said.

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