Myanmar: State owned insurer plans to form credit guarantee firm
Source: Asia Insurance Review | Sep 2018
Myanma Insurance is preparing to set up a credit guarantee corporation, which provides credit guarantee to businesses to obtain credit facilities from financial institutions, reported The Myanmar Times.
The Planning and Finance Ministry created a committee responsible for the drafting of the credit guarantee corporation law. The group is chaired by Myanmar Insurance managing director Daw Sandar Oo and consists of approximately 10 people from the ministry, Myanma Economic Bank, Myanmar Agri Development Bank, Myanmar Banks Association and other players.
Meanwhile, the Central Bank of Myanmar has announced that state-owned Myanma Insurance, under a new Credit Guarantee Insurance (CGI) scheme for banks, will bear 60% of a loan in the event of a default.
The move is expected to encourage more domestic banks to adopt the insurance scheme and lend more to local businesses.
“When calculating the capital adequacy ratio for loans for small and medium-sized enterprises which are under a CGI system, the ratio only needs to take into account 40% of the actual loan,” the announcement also said. A