RHB, CGC in LCTF portfolio guarantee deal

RHB group managing director and CEO Datuk Mohd Rashid Mohamad.

PETALING JAYA: RHB Bank Bhd has signed a portfolio guarantee worth RM400mil with Credit Guarantee Corp Malaysia Bhd (CGC).

The landmark agreement includes a RM100mil allocation to the Low Carbon Transition Facility (LCTF) 1, marking Malaysia’s first LCTF portfolio guarantee aimed at assisting small and medium enterprises (SMEs) in transitioning to a low-carbon economy.

RHB Banking Group managing director and group chief executive officer Datuk Mohd Rashid Mohamad said the partnership with CGC represents a major step forward in empowering SMEs to embrace sustainability.

“By providing essential financial support and risk coverage, we enable SMEs to adopt green practices and contribute to Malaysia’s green growth agenda.

“This collaboration is vital to achieving our goal of delivering RM1.6bil in green financing to our customers by year-end, of which we have achieved 59% as at June 2024,” he said in a joint statement.

Mohd Rashid also said that the group had engaged over 600 SMEs in the second quarter of 2024 to promote environmental, social and governance or ESG awareness and nurture a sustainable business ecosystem.

As of June 2024, the group had approved more than RM411mil for SMEs under Bank Negara’s LCTF.

Meanwhile, CGC president and chief executive officer Datuk Mohd Zamree Mohd Ishak said financial institutions (FIs) and development financial institutions (DFIs) play a critical role in supporting the LCTF by providing financing at competitive rates.

CGC supports financial institutions and development finance institutions by providing its guarantee, which reduces their risk. This encourages them to extend greater outreach to Malaysian micro-SMEs (MSMEs).

“By joining forces, FIs, DFIs and CGC make it easier for MSMEs to secure the funding needed to adopt sustainable practices and contribute to Malaysia’s economic growth,” he added.

Under the agreement, SMEs will benefit from up to 80% guarantee coverage from CGC. Additionally, financing options through LCTF are available for amounts up to RM5mil covering four key areas: SME Green Renewable Energy Financing, SME Green Commercial Property Financing, SME Green Working Capital Financing, and SME Green Capex Financing for Equipment and Machinery. — Bernama