The Ministry of Economy and Finance (MEF) and Credit Guarantee Corporation of Cambodia Plc (CGCC) are encouraging banks and microfinance institutions (MFI) to use credit guarantee mechanisms to boost financial inclusion and help expand small- and medium-sized enterprises (SME) by issuing loans to businesses that lack collateral.
In an August 18 workshop on the potential of credit guarantee projects to enhance financial inclusion for SMEs in Cambodia, MEF secretary of state Ros Seilava, who is also CGCC chairman, touched on a business recovery guarantee scheme (BRGC) that was launched by the government via CGCC in March last year.
As of July 2022, the scheme, which has been running for more than a year, has supported the issuance of about $57 million new loans to businesses or companies that lack collateral through participating financial institutions.
Although $57 million might seem like a small amount, he said it was the beginning of a change in lending habits without relying on collateral in Cambodia’s credit market.
Not only in Cambodia, Seilava said credit guarantee mechanisms are an intervention policy tool used to support financing in economies in countries around the world.
“I hope that the National Bank of Cambodia [NBC] will set out a relevant regulatory framework and policy to drive and encourage banks and MFIs to use credit guarantee mechanisms to boost the financial inclusion and development of small- and medium-sized enterprises,” he said.
Seilava urged stakeholders to discuss challenges, especially banking and financial institutions and business owners, to find solutions to the comprehensive use of credit guarantee mechanisms.
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Author: Hom Phanet
Source: The Phnom Penh Post
Publication date: 18 August 2022