CRITERIA MAY BE REKAXED FOR CREDIT-GUARANTEE SCHEME

       The Finance Ministry and the Small Business Credit Guarantee Corp (SBCG) are considering the relaxation of four criteria in the government's Bt30-billion credit-guarantee scheme after it fell well short of its target.
       The ministry and the SBCG plan to lower the first-year credit-insurance fee of 1.75 per cent after small and medium-sized enterprises (SMEs) said they had not joined the scheme due to the high fee.
       The ministry will discuss with the SBCG how much the fee should be slashed by, because the ministry would have to compensate the corporation for lower income resulting from any cut.
       "We have proposed to the ministry and the SBCG that they lower the fee. They have reacted positively and will bring it to the Cabinet for approval soon," Bank of Thailand Assistant Governor Sorasit Soontornkes said yesterday.
       Only Bt1.85 billion had been spent by the end of last month, short of the target of Bt4.44 billion. The authorities overall target through to the end of next March is Bt30.23 billion.
       In addition, the ministry hopes to get approval to allow SMEs with loans not exceeding Bt40 million to join the programme. The current loan maximum is Bt20 million.
       The government also plans to expand the give-year maturity of the credit quarantee to any period, depending on each debtor's loan maturity. This should help restore confidence for SMEs.
       "We don't want the SBCG to cease its guarantee if the debtor's loan maturity remains. This could cause the creditor to call back the loan," said Sorasit.
       Finally, the ministry hopes to win approval for the SBCG to give a credit guarantee to any type of SME business, instead of limiting it to certain types of activity as at present.
       Howevelr, it will continue to provide all credit insurance based on normal risk management.
       The assistant governor said the central bank had informed SMEs around the country about the scheme in order to persuade them to obtain credit guarantees.
       The central banks is also expanding the Credit Cooperation Centre's role into that of a mediator on debt rescheduling between debtors and creditors. This would help prevent "special-mention loans" becoming non-performing loans.
       The centre will focus only on retial debtors and SMEs, as they have less negotiating power than large companies.
       Its new role begins in October.