New CGCC Scheme to Help PFls Customize Guaranteed Loans

The Credit Guarantee Corporation of Cambodia (CGCC) unveiled the Portfolio Guarantee Scheme (PGS) at the CGCC annual seminar on the ‘Role of Credit Guarantee Schemes in SMEs Development in Cambodia and ASEAN’, here on Tuesday. The scheme was launched by Mey Vann, high representative of Aun Pornmoniroth, Deputy Prime Minister and Minister of Economy and Finance, who also presided over the event.

The PGS will enable Participating Financial Institutions (PFIs) to customize guaranteed loans for their targeted borrowers and allow quick, efficient, and flexible disbursement of guaranteed loans.

Speaking at the seminar, Vann, said, “SMEs (small and medium enterprises) are the indispensable driving force to ensure Cambodia’s sustainable, inclusive and resilient economic growth. SMEs have played important roles in supporting Cambodia’s socioeconomic development and contributed significantly to poverty reduction from 50.2 percent in 2003 to 17.8 percent in 2020 through job creation and income growth.”

He also provided five points of guidance to continue to develop the credit guarantee system in Cambodia, which included strengthening CGCC’s institutional capacity, balancing between expanding outreach and setting specific target businesses for guaranteed loans, expanding cooperation with stakeholders, and encouraging financial institutions to use credit guarantees to disburse more loans without collaterals.

On the new scheme, K L Wong, Chief Executive Officer of the CGCC, told Khmer Times, “The PGS will very much be a targeted scheme for FIs (financial institutions) if they want to customize the guarantee for loans they want to provide. For the banks and the PFIs who have specific target segments among SMEs, we can customize the portfolio, especially for them so that they can give out the loans.”

Elaborating upon the scheme, the CEO said, “It will be very much customized for specific FIs. Because the individual guarantee scheme that we have is a general scheme for every FIs. The PGS is very much targeted. So, let us say, if the Canadia Bank wants to do it for certain sectors, a certain industry, we can do … specifically for them. So, we (will) focus specifically on what they want and customize the guarantee.”

On the leading banks for the scheme, Wong said, for “the new scheme that we have just launched, we are going to be working with Canadia Bank and Sathapana Bank, and, of course, other FIs who are interested as well. Right now, we are in discussion with Canadia Bank and Sathapana Bank.”

On the previous scheme, he said, “The reason why we started off with the individual guarantees was that we wanted to give time to the FIs to understand how they can structure the loans with guarantees. Now, the FIs have been more mature and ready.”

The new scheme would be able to address high volumes of loans with a guarantee. It’s meant to simplify the process, speed up and end up doing high volumes, he added.

Thus, the scheme is customized for the FIs where the FI and the CGCC would mutually agree on the credit criteria for the loans to be offered to MSMEs, is structured to target certain sectors or types of borrowers on which the FIs want to focus for lending, and will enable the FIs to have a faster turnaround time for guarantees and higher volumes of submissions, the CEO said.

SMEs can get quicker access to guaranteed loans, and easier loan approvals as the criteria will be transparent to the borrowers. As long as SMEs are able to meet the criteria, they will be able to get their guaranteed loans, he added.

In his concluding remarks, Deputy CEO of CGCC No Lida said, “The core mission of CGCC is to help businesses access to finance to support Cambodia’s economic growth. Imagine, if businesses with growth potential can get all the necessary capital to support the growth of their full potential, how would this help Cambodia’s economic growth?”

The seminar, jointly organised by the MEF and the CGCC, was attended by over 150 participants, including high-level officials of the MEF, the National Bank of Cambodia, the Ministry of Women’s Affairs, the Ministry of Industry, Science, Technology, and Innovation; national and international development partners, banks and financial institutions and associations.

The seminar’s aims were to review CGCC’s annual guarantee progress, discuss the challenges and solutions on the implementation of credit guarantee schemes, share views on it in the development of SMEs as well as study the experiences of credit guarantee schemes in Malaysia and Thailand.

The MEF Secretary of State also awarded five PFIs of CGCC – Canadia Bank, Sathapana Bank, AMK Microfinance, ABA Bank, and LOLC Microfinance – for their excellent performance in 2022.

Credit to: Khmer Times, Publish on January 18, 2023