Collateral worth 4 trillion baht used in business operations has been pledged to secure loans since the Business Collateral Act went into force in 2016.
Some 200,000 applications for collateral registration have been received, said Pornchai Thiraveja, an adviser to the Fiscal Policy Office.
The law aims to help small and medium-sized enterprises (SMEs) and startups obtain credit by letting them use inventory, raw materials and intellectual property as collateral.
Dozens of SMEs are still struggling with a liquidity crunch despite the economic recovery.
Previously, borrowers could not retain possession of movable assets pledged as collateral for the duration of the security period. Out-of-court enforcement options were also limited.
The new law removes these prohibitions and provides borrowers with greater access to credit. These significant developments should improve the country's system of secured transactions and increase investment in domestic ventures.
Under the law, limitations on the type of assets that can be put up as collateral are eliminated. Collateral can now consist of machinery, inventory, raw materials, real property, intellectual property or any other asset specified in the ministerial regulations.
In a related development, a ministerial announcement by the Finance Ministry, in force since late February, enables four additional juristic bodies to accept these types of collateral in exchange for a loan.
The bodies are the Office of the Permanent Secretary for Industry (in the case of the SME Development Fund under the government's public-private collaborative scheme), foreign banks (in cases of syndicated loans with local banks), leasing service providers and lenders.
Mr Pornchai said the SME Development Fund has capital of 2 billion baht for loans to SMEs or joint ventures with SMEs.
