ACSIC conference highlights role of credit guarantee institutions in promoting MSMEs

KATHMANDU: The third day of the 36th Asian Credit Support and Innovation Conference (ACSIC) concluded with five insightful sessions, emphasizing the critical role of credit guarantee institutions in supporting micro, small, and medium enterprises (MSMEs) across Asia.

During the morning session, Deputy Governor Bam Bahadur Mishra highlighted the numerous challenges faced by MSMEs and stressed the importance of credit guarantees. “In the current context, where MSMEs face multiple constraints, credit guarantee institutions play a vital role in bridging the gap between credit demand and supply,” said Mishra. He encouraged these institutions to collaborate closely with central banks to promote sustainable growth across all sectors.

Panelists Nur Syamsudadi from Asippindo (Indonesia) and Hatano from the Japanese Federation of Credit Guarantee noted Indonesia’s efforts to enhance financial literacy among SMEs, with a target to make 80% of them creditworthy. Hatano also pointed out the ongoing challenge of raising awareness about digitalization, which could improve operational efficiency.

Keynote speakers reflected on Nepal’s credit guarantee history, particularly the pivotal role of the Deposit and Credit Guarantee Fund (DCGF) since its establishment in 1974. Nepal Rastra Bank reaffirmed its commitment to allocating 15% of total bank credit to MSMEs, focusing on agriculture and youth entrepreneurship.

In the afternoon, discussions shifted towards innovative financing strategies in Asia, including KODIT’s AI-powered BASA system, which helps SMEs assess their creditworthiness through real-time diagnostics. AI-driven financial services by TCG and PHILGUARANTEE’s support for industries like tourism and energy were highlighted as key drivers for economic recovery during the pandemic.

Richa Chaudhary, Manager at CGTMSE, remarked, “These loans act as a lifeline for small enterprises, allowing creativity and innovation to thrive.” The schemes under CGTMSE offer coverage ratios up to 85%, providing crucial financial backing for MSMEs. Mandira Thapaliya, Head of DCGF, shared that the fund has supported over 1.4 million borrowers with guarantees totaling $1.7 billion, including innovative startup-focused schemes.

Session 7 delved into pricing strategies for financing innovation, discussing the need for pricing models based on risk factors to support both project growth and investor returns. Anish Tamrakar, Chief Digital Banking Officer of Kumari Bank, noted that balancing project viability with pricing models is increasingly challenging in the current market.

A roundtable discussion titled “Charting the Course: Managing Risks in Financing Innovation, Strategies, and Insights” focused on the risks associated with financing innovative businesses, particularly during economic downturns and natural disasters. Japanese and Korean credit guarantee institutions shared insights on using comprehensive data-based models to assess potential risks in startup financing.

Japan Finance Corporation (JFC) outlined three risk-sharing models: collaboration with financial institutions, venture debt schemes, and specialized teams for innovative businesses. Meanwhile, KOREG of Korea, which provides re-guarantee services, highlighted its efforts to support regional credit guarantee foundations and offer training programs to strengthen credit guarantee schemes.

The final session, “Designing Sustainable Guarantee Programs Amidst Uncertainties,” was moderated by Prof. Dr. Suresh Manandhar, CEO of Wiseyak, and Koseph Silvanus, MD of Dolma Consultancy. The discussion focused on integrating AI tools into guarantee programs to enhance sustainability, emphasizing the importance of data warehousing, standardization, and leveraging human capital in AI and actuarial science.

Koseph Silvanus also stressed the importance of statistical models for credit scoring and customer segmentation, identifying key challenges organizations face when adopting AI, including faster decision-making, portfolio monitoring, and improving customer experiences.

The day concluded with a call to embrace AI tools for increased efficiency in credit guarantee institutions and to ensure sustainable financing solutions for MSMEs across Asia.