TCG, financial institutions 'ready to cope' with new law on guarantees
All financial institutions are ready for guarantees from the Thai Credit Guarantee Corporation (TCG) on their new loans as a means to cope with the revised law on loan guarantees, while the TCG remains confident of achieving its guarantee target of Bt80 b
The TCG president, Vallobh Tejapaibul, said that it was ready to implement the new loan guarantee law, which will take effect on February 11.
This direction came after the Bank of Thailand, the Fiscal Policy Office, the TCG and 20 financial institutions met to discuss the impact and preparations to implement the amended law on loan guarantees.
"We discussed the details and procedures to abide by the amended law," Vallobh said.
He said more than 90 per cent of commercial banks’ loans used to be collateralised by persons and now they had to review their credit portfolios and the management of collateral impairment, while new loans may be guaranteed by the TCG, instead of persons.
An increase in guarantees by the TCG is expected to be seen six months after the amended law takes effect. The TCG is targeting Bt80 billion loan guarantees this year, based on national economic growth at 4.5 per cent. The amended law is excluded from the forecast. Thailand is expected to see lower-than-expected growth this year, but the TCG has not yet revised down its loan guarantee target for the year in expectation of more guarantee services from financial institutions.
At the end of November 2015, the TCG had Bt54.8 billion guarantees in 22,000 cases with accumulated guarantees in 130,000 cases, amounting to Bt385 billion.
