From left, CGC President and CEO, Datuk Wan Azhar Wan Ahmad and SME Bank Group Managing Director, Datuk Mohd Radzif Mohd Yunus, congratulating each other after finalising the PG collaboration, recently.
Kuala Lumpur, 15 Sept – SME Bank today signed a Portfolio Guarantee (PG) agreement with Credit Guarantee Corporation Malaysia Berhad (CGC) to offer RM30 million of financing to viable small and medium enterprises (SMEs).
This is the first ever PG between CGC and a development financing institution in the country designed to ease the burden on viable SMEs as they are expected to benefit from the lower cost of financing and a faster turnaround time in terms of approvals and disbursement offered under this agreement.
The initial portfolio of RM30 million will benefit approximately 200 SMEs within the next one year through financing between RM100,000 to RM500,000. The purpose of this financing facility is to provide the SMEs with the working capital required to manage their business cash flow and for business expansion at a fixed rate of between just 5% – 7% per annum.
CGC President and CEO Datuk Wan Azhar Wan Ahmad said the award-winning PG, launched in 2009, has proven to be effective in addressing the financing needs of the SMEs and improve on its SME outreach.
“Under the PG approval for financing, the eligibility criteria is upfront, making it easier to better manage the asset quality of the portfolio. Such pre-determined arrangement will also enable lower costs of financing to the borrowers as PG has lower transaction cost.”
“With the PG in place, the SMEs are now able to benefit from the speed at which financing applications are processed and approved as it allows them to gain quicker access to the much-needed financing. Currently, CGC’s PG system provides approvals within three (3) calendar days to speed up the approval and disbursement process of the banks. We are looking at the probability of reducing this process further to just one day,” he said adding that at present, the approval rate for applications under PG is almost 100%.
SME Bank Group Managing Director, Datuk Mohd Radzif Mohd Yunus said the collaboration will facilitate access to credit by helping SMEs to develop their creditworthiness and good track record and assist new customers to obtain the much needed funding for their business expansion plans.
“The collaboration with CGC will also allow SME Bank to enhance its credit risk management via risk-sharing and have a holistic view of a prospective customer’s readiness in servicing the financing,” he said.
This PG agreement had reinforced both parties’ commitment and support towards SME development in the country not just in terms of enhancing access but also in terms of costs of financing.
To date, CGC has availed close to RM1.5 billion of financing that had benefited over 4,000 SMEs. It is targeting to avail new guarantee of at least RM700 million under various PG arrangements in 2014.
SME Bank is the eighth financial institution on board after Maybank, Standard Chartered Bank, OCBC, RHB, Public Bank Berhad, Alliance Bank and SC Saadiq.
About CGC
Credit Guarantee Corporation Malaysia Berhad (CGC) was established on July 5, 1972. Current shareholders are Bank Negara Malaysia (major shareholder) and commercial banks. The core business focus of CGC is 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. CGC has cumulatively guaranteed more than 420,000 loans valued at close to RM53.9 billion since its establishment.
Today, CGC is well on track to achieve its financial sustainability agenda as envisaged under its business transformation plan. In the last four (4) years, CGC has registered an increase in its net profits ranging from RM15.6 million in 2010 to RM121.1 million in 2013.
CGC, known as the ‘credit firm for the small man’ in its early years, focused on helping small enterprises in the agricultural, commercial and industrial sectors. As the Malaysian economy expanded over the years, the demand for CGC’s guarantee services also grew in tandem since its establishment in 1972. The range of products and services were also expanded to cater to larger credit facilities required by medium-sized SMEs.
CGC’s support for SME’s is not only confined to the provision of loan guarantees and financing facilities, but also credit information and credit rating services through its subsidiary Credit Bureau Malaysia. Through the Bureau, CGC assists SME’s to build a credit history and track record to enhance their credibility and bankability to secure financing on their own merit and at reasonable cost.
Other funds currently managed by CGC include the Green Technology Financing Scheme (GTFS) and the Bumiputera Entrepreneur Project Fund (TPUB-i) with a total allocation of RM3.5 billion and RM300 million respectively. To date, CGC had managed a total of 43 guarantee schemes including 16 government-funded schemes. To date, 15 Islamic banks, 17 commercial banks and seven (7) development financial institutions (DFIs) are participating in CGC’s guarantee schemes, providing customers with a wide network of more than 2000 branches nationwide to avail financing.
SMEs wishing to obtain more information on CGC may call its Client Service Centre at 03-78800088 or visit www.cgc.com.my
About SME Bank
Designed to function ultimately as a one-stop financing and business development centre, Malaysia’s SME Bank is dedicated to the accelerated growth of Malaysian SMEs. Through better segmentation of SME financial and non-financial needs by industry, stage of growth and product and market potential, the Bank will strive to hasten the financing processing of eligible SMEs to meet their financing needs as well as support their business growth requirements through the provision of timely advisory services. The principal activities of the Bank are to provide financing as well as financial and business advisory services to Malaysian SMEs residing within predefined categories which have been framed within the SME classification guidelines of the National SME Development Council. For more information, please visit: www.smebank.com.my