Credit Guarantee Corporation targets coverage for RM2b new loans

  • Business
  • Wednesday, 13 Mar 2013

KUALA LUMPUR: Credit Guarantee Corporation Malaysia Bhd (CGC) is confident of providing guarantee cover for RM2bil in new loans this year.

Its managing director and CEO, Datuk Wan Azhar Wan Ahmad said on Wednesday he was certain the corporation would surpass last year's loan figures, which was in excess of RM1bil new loans, benefitting 3,000 customers.

"With the participation of five financial institutions, namely Alliance Bank, Standard Chartered Bank, OCBC Bank, RHB Bank and Public Bank, there will be more products in the pipeline for small and medium enterprises (SMEs)," he said at the signing of a strategic alliance agreement between CGC and Alliance Bank Bhd for a portfolio guarantee.

Starting with a tranche size of RM50mil, the portfolio guarantee aims to assist small businesses by providing loans for working capital as well as asset acquisition.

CGC would be providing 70% guarantee cover of the approved total principal amount taken by SMEs and would assist to verify the credibility of applicants in consultation with Alliance Bank, he said.

Wan Azhar said the minimum loan quantum under the portfolio guarantee is RM100,000 and the maximum is RM300,000 per SME customer at a fixed loan tenure of five years.

Applications can be made at any Alliance Bank branch nationwide.

He said with pre-determined eligibility criteria, CGC has been able to provide approvals within three days upon receipt of the application from the participating financial institutions.

"The current approval rate is almost 90%, which is relatively higher compared with our other schemes due to the efficiency of the process flow," said Wan Azhar.

Under this scheme, SMEs do not need collateral and track record, unlike commercial institutions, such as banks, that have to consider those risks, he said.

Wan Azhar hoped that once borrowers get into CGC guarantee scheme, they would be able to build their track record, and with this, they don't have to rely too much on government support.

"Our advantage is that CGC goes down to the smaller types of loan and the impact is greater in terms of the number of borrowers.

"Unlike commercial banks, our key performance indicators (KPI) are number-driven and more focused on the growth of SMEs to access financing. With the emergence of our scheme, it is designed to bring in the numbers," he said.

Creating access to these funds was the issue and not the fund availability which is in abundance currently, he added.

CGC was established in July 1972 to assist SMEs, especially those without or with inadequate collateral and track record to obtain credit facilities from financial institutions by providing guarantee cover on such facilities.

The corporation has cumulatively guaranteed more than 420,000 loans valued at close to RM51bil since its establishment. - Bernama

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