The state-owned Thai Credit Guarantee Corporation (TCG) is about to roll out a new product providing various loss-sharing features based on customer risk profile, its chief says.
The new product could set minimum non-performing loan (NPL) coverage at 15% in the event that customer risk is low or a maximum at 50% for businesses to which the government lends support, president Rak Vorrakitpokatorn said after Finance Minister Apisak Tantivorawong delivered a policy allowing TCG to consider the appropriate loss-sharing level.
TCG's average risk absorption, however, must not increase, Mr Rak said.
According to Portfolio Guarantee Scheme 7, the government's sponsored credit guarantee, NPL coverage was capped at a single rate of 30%. TCG has offered one-size-fits-all NPL coverage since its establishment.
TCG aims for its credit guarantees to reach 107 billion baht this year after hitting 100 billion last year. To achieve the target, tailor-made products that match customer demand and lenders' portfolios will be offered.
In other news, Mr Rak said TCG has joined with Government Savings Bank and the Bank for Agriculture and Agricultural Cooperatives to offer occupation and community loans to self-employed workers, including contractors and reporters, to enable them to better access financial institutions' low-rate loans.
Under the loan scheme, borrowers will be given a credit line for a specific period, while TCG will guarantee the loan at the proper NPL coverage, he said.
The new product is part of TCG's plan to offer customised credit guarantee products in line with Mr Apisak's policy.
Small and medium-sized enterprise NPLs represent 6-7% of the banking industry's total loans for the segment, but TCG offers 30% bad-loan coverage, Mr Rak said, adding that the state-owned credit guarantee provider then provides customised products to bring down annual fees.
He said TCG will ask its partner banks to charge interest based on the risk of SME borrowers who use credit guarantee service.
