Chairman of the Association of Financial Institutions Mehmet Cantekin announced that the establishment of a second Credit Guarantee Fund (CGF) is on the agenda.
After starting earlier this year with TL 250 billion ($71.47 billion) of credit designated for solving corporations' financing problems, the establishment of a second fund is high on the agenda of the Association of Financial Institutions, according to a report from the Turkish business website Businessht. Cantekin also confirmed the association has communicated the demand for the foundation of the second fund to authorities.
Prefacing that the asset size of the financial leasing, factoring and financing companies have reached TL 120 billion, Cantekin said: "We demand that the guarantee secured by the CGF also be provided for non-bank financial institutions [NBFIs]," claiming that the CGF's support will further boost the sector and ensure more effective cost management. He also said that loans taken by NBFIs for the trade of goods and services are categorized as direct investments.
Analysts have previously said that loans guaranteed by the CGF made positive contributions to both the real sector and banking sector. According to data provided by the CGF, more than 310,000 enterprises had used CGF-supported loans, totaling nearly TL 210 billion by the end of July.
The CGF was established to provide strategic support to Turkey's growth and development, facilitating access to financing for all enterprises, especially those that can demonstrate promise. The fund aims to become a financial support agency, ensuring access for small and medium-sized enterprises (SMEs) and non-SMEs to credit in association with national and international cooperation.
The CGF accomplished new innovations and transformations in 2016 and became the most preferable organization to facilitate SMEs' access to financing in the same year through the support backed by its own equity. Having attained a growth rate of 91 percent in 2016 compared to the rate of previous year, TL 1.199 million in loans was provided through the banking system to 3,170 SMEs.
From 2010 to 2016, 41 percent of the CGF-supported loans were allocated to heavy industry while 57 percent were provided to the services sector. The remaining share was given to the agriculture industry.