KUALA LUMPUR, Nov 21 (Bernama) — Credit Guarantee Corporation (CGC) expects to provide financing worth RM200 million to about 400 small and medium enterprises (SMEs) under its first Islamic Portfolio Guarantee (PG) Scheme, in collaboration with Standard Chartered Saadiq Bhd.
CGC Managing Director Datuk Wan Azhar Wan Ahmad said the Islamic PG scheme will be executed based on Islamic financing and Shariah compliant terms to further improve channels of financing for SMEs in the country.
“CGC has been at the forefront of SME development since its inception 41 years ago.
“We will continue to play a prominent role in SME financing especially for marginal but potentially viable SMEs,” he told a press conference at the signing of the Islamic PG agreement between CGC and Standard Chartered Saadiq Thursday.
The new scheme offers financial support of between RM100,000 and RM800,000 with flexible financing tenure of 12 to 84 months depending on the SME’s cash flow and other requirements.
Wan Azhar said the financial tenure would be around three to five years and not all companies would go as far as 10 years.
Commenting on the growth of SME sector, he said the Bumiputera community is hungry for business investment which sometimes can be overwhelming and there are tendencies for them to be involved in businesses which are diverse.
“That creates problem for them in term of focus, so we will create a scheme for specific sectors that will allow them to focus on a particular business type,” Wan Azhar added.
He also said the scheme would allow CGC to monitor the borrowings of the other businesses of SMEs to ensure they would be able to control and guide the business operations.
The scheme will provide greater tolerance towards Bumiputera borrowers in terms of slightly lower cost, flexible eligible criteria and longer tenure if possible, he added.
As for PG conventional scheme, Wan Azhar said to date, CGC has released RM820 million to almost 3,000 SMEs within five years, at an average of RM400,000 to each SME.
Meanwhile, Standard Chartered Saadiq and Global Head Chief Executive Officer Wasim Saifi said the SME sector was one of the fastest growing segments in Islamic finance and by offering the PG scheme, it reflected the bank’s commitment towards the vital and potential segment.
Under the agreement, CGC guarantees 70 per cent of the approved total principal amount undertaken by SMEs and assists in verifying the credibility of applicants in consultation with Standard Chartered Saadiq.