SMEs loan guarantee raised to RM1bil

  • Metro Biz
  • Friday, 06 Mar 2015

Let the fund begin: (From left) Syed Abdull Aziz, Ooi, Agil and CGC chief executive officer Mohd Zamree Mohd Ishak at the launch of RM1Bil SME wholesale guarantee agreement between the two institutions.

CREDIT Guarantee Corporation Malaysia Bhd (CGC) and OCBC Al-Amin Bank Bhd (OCBC Al-Amin) have announced that they will be increasing the country’s first and only SME wholesale guarantee to RM1bil before the end of this year.

The fresh RM500mil from this move will be made available in two tranches of RM250mil each in May and December, following the two successful earlier tranches of the same amount in April and November last year.

According to OCBC Al-Amin director and chief executive officer Syed Abdull Aziz Syed Kechik, the wholesale guarantee has, in effect, given rise to a new phase in the development of Malaysia’s unsecured business financing efforts especially for SMEs which the bank has been supporting for decades.

“Just like in the earlier agreements, 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.

“The first two tranches totalling RM500mil have effectively guaranteed more than 2,000 businesses in 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.

Commenting on the scheme’s doubling by the end of the year, CGC president and chief executive officer 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.

“The strategic partnership with OCBC Al-Amin is, in fact, the third collaborative effort between CGC and OCBC Bank in the last few years. I am confident our continued partnership will bring much benefit to both institutions and, most importantly, to viable SMEs that are eligible for access to financing.

“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,” Mohd Zamree said.

CGC was established in 1972, and its shareholders include Bank Negara Malaysia (major shareholder) and commercial banks.

Its core business focus is to assist SMEs that are without or have inadequate collateral and track record to obtain credit facilities. It does so by providing guarantee cover on such facilities extended by financial institutions.

Also present at the event were the chairman of OCBC Al-Amin Datuk Ooi Sang Kuang and CGC chairman Datuk Agil Natt.

The WG-i centres on OCBC Al-Amin’s unsecured financing product, Business Cash-i (BC-i), introduced in 2012.

According to Syed Abdull Aziz, 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.

Those interested to find out more about BC-i can call 1300 88 7000 or 1300 88 0255.

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