TCG unveils plans to help SMEs convert NPLs to standard debt

Debtors with non-performing loans from 30 years ago may receive assistance to restore their debt status to normal under an initiative by the Thai Credit Guarantee Corporation (TCG). 

These individuals can opt for a repayment plan with a minimum instalment of 500 baht per month.

The director and general manager of TCG, Sittikorn Direksoonthorn, made the revelation at the “Econmass Talk EP.2” event organised by the "Economic Reporters Association".

Speaking on the theme "Smart Credit Guarantee: A Mechanism to Boost Business Towards a 5G Future" on Friday (December 6), he announced that TCG, as a state financial institution, is prepared to support the government’s debt resolution initiative for SME entrepreneurs, set to be announced on December 11.

Currently, TCG is implementing the “TCG Ready to Help” initiative, which includes the Three Colors Programme — Purple, Yellow, and Green. This programme aims to restructure the debts of TCG clients, helping them return to standard debtor status.

"Over the past three years, the programme has assisted more than 15,000 debtors, with a total debt value exceeding 10 billion baht," Sittikorn said.

He noted that, beyond current debtors, TCG was also addressing long-standing non-performing loans (NPLs) from its inception over 30 years ago, involving tens of thousands of cases. Some of these debts are relatively small, under 100,000 baht, yet borrowers have been hesitant to engage with the TCG. This has resulted in bad credit records in the credit bureau system, preventing these individuals from accessing loans from financial institutions.

To address this, TCG has opened a 24-hour communication channel via Line to encourage these debtors to engage in discussions and find solutions.

"For debtors in this group, the ‘TCG Ready to Help’ programme provides tailored assistance, such as reducing the penalty interest, offering flexible repayment plans with a minimum instalment of just 500 baht per month, and allowing interest-free repayments for up to seven years," Sittikorn siad

Engaging with the TCG can help these debtors repay their loans faster, as repayments prioritise principal reduction over interest, he said. Additionally, the TCG offers a 15% principal reduction for those wishing to fully settle their debts, aiming to restore them to normal debtor status as quickly as possible, he added.

Regarding SME loan trends, it was observed that micro-borrowers are taking out smaller loans, averaging 90,000 baht per person compared to 120,000–150,000 baht in previous years. This indicates that small business owners, such as vendors, are gaining better access to financial resources through TCG’s credit guarantee system, he said.

The lower loan amounts reflect a preference among borrowers for quick access to smaller loans to enhance daily liquidity rather than seeking large sums. If commercial banks focus more on this segment and leverage TCG’s credit guarantees, they could significantly benefit small-scale entrepreneurs.