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Seven more financial institutions join CGCC

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Seven financial institutions (FI) on Tuesday signed a credit guarantee agreement with the Credit Guarantee Corporation of Cambodia (CGCC). Photo supplied

Seven more financial institutions join CGCC

Seven financial institutions (FI) on June 29 signed a credit guarantee agreement with government-owned Credit Guarantee Corporation of Cambodia (CGCC) to provide more business loans in an effort to contribute to economic activities amid the ongoing Covid-19 health crisis.

The FIs in the “second batch of participating financial institutions [PFI]” were Amret Microfinance Institution (MFI), BRED Bank, Camma MFI, Foreign Trade Bank of Cambodia, J Trust Royal Bank, LOLC MFI and Sathapana Bank.

This brings the total number of CGCC’s PFIs to 15. The agreement enables CGCC and PFIs to collaborate on disbursing guaranteed loans to businesses in Cambodia.

Ministry of Economy and Finance secretary of state and CGCC chairman Ros Seilava said the credit guarantee mechanism is a new financial service in Cambodia that is expected to help resolve a host of financing challenges and foster “a new lending culture” among banks and MFIs.

“I would like to encourage the PFIs to seize the opportunity of partnering with CGCC to expand your customer base and market segments through the provision of new loans with the guarantees from CGCC.

“At the same time, to reap the long-term benefits of this credit guarantee scheme, it is very critical for the PFIs to adhere to professionalism and strengthen the governance on credit assessment and monitoring,” he said.

After the signing, LOLC (Cambodia) Plc CEO Sok Voeun told The Post that his institution would do its part by injecting more funds into the economy, at a time when many businesses are in need of capital for survival during the spread of Covid-19.

“Businesses in the service, agriculture, commercial and transport sectors are seeking more funds to support themselves. With this participation, we can scale up our loan sizes, especially to small and medium enterprises that are affected by Covid-19. This is our contribution to economic growth during this tough time,” he said.

Early this month, Canadia Bank Plc became the first member of the CGCC’s Business Recovery Guarantee Scheme (BRGC).

The ministry launched the $200 million BRGS scheme in March to improve business’ access to formal loans from PFIs for working capital, investment and business expansions.

The scheme will be available until the end of 2022 and the guaranteed loans will be disbursed through PFIs on a “first-come, first-serve basis”. So far, 18 guarantees have been issued to PFIs under the BRGS.

The CGCC notes that the increasing number of PFIs will provide borrowers across the country with more diverse financing options under the guarantee scheme.

The corporation’s guarantee will act as collateral or security for 70-80 per cent of the loan amount borrowed from PFIs and hence reduce the physical collateral required from borrowers and improve their odds of getting loans, it said.

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