36th ACSIC conference highlights role of credit guarantees to foster innovation, financial inclusion

KATHMANDU: Participants at the 36th conference of the Asian Credit Supplementation Institution Confederation (ACSIC) on Saturday emphasised the importance of credit guarantees for financial inclusion and technological innovation. They noted that such guarantees could alleviate banks' and financial institutions’ fears of potential credit defaults.

The conference organised by the Deposit and Credit Guarantee Fund (DCGF) began on Friday in Kathmandu.

Entrepreneurs with innovative ideas often face financial barriers due to a lack of collateral. Credit guarantees for these entrepreneurs could foster innovation, the participants said.

Many ACSIC-associated credit guarantee institutions already support startups, particularly micro, small, and medium enterprises (MSMEs), nurturing regional innovation.

Anirvan Ghosh Dastidar, CEO of Standard Chartered Bank Nepal, stressed the need for partnerships with credit guarantee institutions to support startups and MSMEs. “Banks usually avoid funding where there is a risk of defaults,” he said. “With the rise of startups in Nepal, credit guarantees are increasingly necessary to unlock their economic potential.”

Yuba Raj Khatiwada, chief economic advisor to Prime Minister KP Sharma Oli, highlighted the role of digital banking in making financial services more inclusive. “Only 18% of Nepal’s population has taken credit from BFIs, which is extremely low,” he said, underscoring the importance of credit guarantees for financial access. He noted that while Nepal lags in supporting SMEs and innovation, other ACSIC countries have made significant progress.

Jungin Youn, Policy Advisor for the Chairperson of Korea Credit Guarantee Fund (KODIT), mentioned that KODIT provides special guarantees for youth entrepreneurship to foster an entrepreneurial culture. “KODIT invests in challenging but innovative ideas and plans,” he said.

Credit Guarantee Corporation Malaysia Berhad (CGC) supports MSMEs through guarantees, financing, and beyond. “CGC has supported one-third of Malaysia’s SMEs to date,” said Mohammad Zamree Mohammad Ihsak, President and CEO of CGC. “Adapting to rapid technological advancements and the shift towards digital business models are new challenges for MSMEs.”

Celso Gutierrez, Senior Vice President of Philippine Guarantee Corporation, stated that his organisation provides financial credit guarantees to entrepreneurs, mitigating risks and fostering an entrepreneurial environment.

Yu-Hsin Kuo, Advanced Manager of the SME Credit Guarantee Fund of Taiwan, said his institution not only provides direct credit guarantees to SMEs but also encourages applications through partner banks. “We support SMEs at every stage of their development, helping some startups introduce important technologies,” he said.

Erik Talasdev, Deputy Chairperson of OJSC Guarantee Fund of Kyrgyzstan, noted that the OJSC provides individual, portfolio, and mortgage guarantees, prioritising agriculture, industry, processing of agricultural products, tourism, and mortgages.

Lida No, Deputy Chief Executive Officer of Credit Guarantee Corporation of Cambodia (CGCC), said the CGCC offers loan and bond guarantees specifically aimed at supporting SMEs and other businesses, streamlining the borrowing process. “The CGGC is prioritising green financing initiatives, aligning its support with sustainable practices that benefit the environment,” said No.

Yohei Yamaguchi, Senior Economist at Japan Finance Corporation (JFC), stated that JFC is promoting technological advancements in the logistics sector, particularly through market robotics, which includes automated picking and storage systems. These innovations have captured a significant share of the Japanese market and enhanced operational efficiency.
“While Japanese commercial banks support businesses, the equity finance market remains underdeveloped compared to other countries,” he said. “This gap necessitates government intervention, such as support from the Japan Finance Corporation (JFC), to foster SME innovation and growth.”

Sanjaya Thakur, Advisor and Mentor (Fintech) at T-Hub Foundation, Hyderabad, India, highlighted that credit guarantees could unlock MSME growth in the ARCTIC region. “Such schemes should be based on ground realities, as seen in Japan, which has 51 different credit guarantee schemes for 51 regions,” he said. He also stressed the need for inclusive finance to achieve sustainable development goals (SDGs). “10 out of 17 SDGs depend on inclusive finance, and credit guarantees play a crucial role,” he said.

Earlier on Friday evening, Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel inaugurated the conference. 

Addressing the programme, he stressed the importance of credit flow for economic development, highlighting DCGF's role in facilitating innovation and startup credit. He lauded the fund's effectiveness in guaranteeing public deposits.

Finance Minister Paudel also praised the conference's focus on innovation and DCGF's role in information sharing and providing financial access to small businesses. He stated, "DCGF encourages those without a sufficient mortgage to take loans, thus facilitating the economy."

On the occasion, Nepal Rastra Bank (NRB) Governor Maha Prasad Adhikari called for refining the deposit insurance scheme to ensure effective intervention in banking issues. He acknowledged DCGF's growing capacity and its support for the private sector, even during international financial crises.

Governor Adhikari also highlighted the central bank's promotion of microfinance programmes, which have expanded social justice and financial access. He commended DCGF's contribution to these programmes and expressed confidence in its continued growth.

DCGF CEO Ramesh Ghimire reported that the fund has secured deposits worth Rs 1,430 billion and credit guarantees worth Rs 296 billion. He emphasised the conference's focus on innovation, stating, "New ideas can be used as collateral for credit."

Bikrant Acharya, Chief of DCGF's Deposit Guarantee Department, mentioned that the conference would explore ways to promote economic growth, with 140 representatives from 20 Asian countries participating in the four-day event.

The conference will continue until Monday.