The state-owned Thai Credit Guarantee Corporation (TCG) has set a 10-billion-baht credit guarantee for motorcycle taxi drivers and self-employed workers to help them better access loans from financial institutions.
Of the total, 1 billion baht will be earmarked for motorcycle taxi drivers and the rest for self-employed workers.
The new credit guarantee scheme aims for 10,000 motorcycle taxi drivers to help generate circulating capital worth 4.58 billion baht in the economic system and reduce underground loans worth 100 million baht secured by motorcycle taxi drivers, said TCG chairman Surachai Danaitangtrakul.
He said 200,000 motorcycle taxi drivers registered with the Land Transport Department are the target of TCG's new service, which provides credit guarantees for loans worth up to 100,000 baht each in the case of new motorcycle purchase and repairs, and up to 50,000 baht for refinancing underground loans and emergency borrowing.
Motorcycle taxi drivers are also required to have public vehicle driving licences and own permanent assets worth less than 5 million baht.
A survey recently conducted by Chulalongkorn University said 10% of motorcycle taxi drivers borrow from loan sharks.
TCG president Rak Vorrakitpokatorn said the new scheme will help reduce income disparity, which is in line with the national strategy to sharpen competitiveness by increasing financial service accessibility.
The government has a policy to continuously help small operators easier access financial funding by using TCG's credit guarantee service as a mechanism.
Interested motorcycle taxi drivers can use TCG's credit guarantee to apply for loans at Government Savings Bank, Small and Medium Enterprise Development Bank of Thailand (SME Bank), Tisco Bank and Thai Retail Credit Bank.
The scheme will help motorcycle taxi drivers save up to 40,000 baht per four-year term, as those with the credit guarantee are subject to 1,500 baht a month in payments, compared with 2,500 baht if their loan is not guaranteed, Mr Rak said.
The new loan also changes TCG's working process by directing resources to target borrowers and providing them with preapproved credit guarantees to seek loans from financial institutions, instead of waiting for banks' requests.
The state-owned agency's new credit guarantees are aimed at 107 billion baht this year, up from 100 billion last year.
To achieve the target, tailor-made products that match customer demand and lenders' portfolios are needed.
Mr Rak said recently that TCG was about to roll out a new product providing various loss-sharing features based on customers' risk profile.
The new product could set minimum non-performing loan (NPL) coverage at 15% in the event that customer risk is low or up to 50% for businesses to which the government lends support.
TCG has offered one-size-fits-all NPL coverage since its founding.
