KUALA LUMPUR: Credit Guarantee Corporation Malaysia Bhd (CGC) and OCBC Al-Amin Bank Bhd (OCBC Al-Amin) will increase the country’s first and only SME wholesale guarantee to RM1bil before year-end.
In a joint statement issued on Tuesday, they said fresh RM500mil would be made available in two tranches of RM250mil each in May and December. It launched two tranches of the same amount in April and November last year.
OCBC Al-Amin director & CEO Syed Abdull Aziz Syed Kechik pointed out the wholesale guarantee had helped develop Malaysia’s unsecured business financing efforts especially for SMEs which the bank had been supporting for decades.
The new tranches of the wholesale guarantee-i (WG-i) will see the ratio of risk involved in the financing of businesses shared equally between CGC and OCBC Al-Amin for a guarantee period of five years.
Syed Abdull Aziz said the first two tranches totalling RM500mil had effectively guaranteed more than two thousand businesses from industries ranging from retail and wholesale to manufacturing.
“With the overwhelming response from these initial tranches, it has taken only a year for the commencement of the next phase of tranches which is expected to bring the total number of SMEs served up to over 5,000 before the end of the year,” he said.
CGC president and CEO Mohd Zamree Mohd Ishak said CGC was pleased with the success of OCBC Al-Amin’s first two tranches and the quick and seamless progression to the third tranche in May and the fourth in December 2015.
“The strategic partnership with OCBC Al-Amin is in fact the third collaborative effort between CGC and OCBC Bank in the last few years.
“CGC continues to encourage more businesses to embrace unsecured financing as both provider and recipient.
With the availability of CGC’s role in sharing the risk in this guarantee, more banks can now have the confidence to come forward to provide innovative financing options to meet the growing trends and needs of SMEs that are projected to contribute 41% to the country’s gross domestic product by 2020.
“CGC has been at the forefront of SME development and continues to play a prominent role in SME financing especially for the marginal but potentially viable SMEs. With increasing demand for financing from this segment, CGC continues to step up its efforts to expand SME outreach by forging strategic alliances with various financial institutions,” he said.
The WG-i centres on OCBC Al-Amin’s unsecured financing product, Business Cash-i (BC-i), introduced in 2012.
Syed Abdull Aziz said BC-i was developed in line with the increasing appetite from SMEs for unsecured term financing to fulfil their short to medium term business financing needs.