Credit guarantee insurance not helping small businesses
Credit guarantee insurance was introduced under the former government in 2014 but the system has not been widely adopted by banks and businesses. As a result, financial support for SMEs remains inadequate. So far, CB bank has offered loans to 21 businessmen, KBZ has given loans to only three, and banks are still unable to trust the businesses under the credit guarantee insurance, according to Daw Aye Aye Win, director general of the Ministry of Industry, SME Development Department. Insurance firms began selling credit guarantee insurance for SMEs in May 2014. The insurance scheme saw state-owned Myanma Insurance or private firms reimburse lenders to SMEs some 50 percent of the loan in the event of a default, which could serve the purpose as a collateral for bank loans. But one year after the launch of the scheme, the then-deputy finance minister U Maung Maung Thein said no SMEs had taken advantage of the insurance.