KUALA LUMPUR: RHB Banking Group has signed a RM400 million portfolio guarantee with Credit Guarantee Corporation Malaysia Bhd (CGC) to support small and medium enteprises adopting sustainable business practices.
The landmark agreement includes Malaysia's first low carbon transition facility (LCTF) portfolio guarantee worth RM100 million to assist SMEs transition to a low-carbon economy.
RHB said the LCTF portfolio guarantee agreement offers SMES up to 80 per cent guarantee coverage from CGC.
The LCTF financing options available up to RM5 million across four pillars - SME green renewable energy financing, SME green commercial property financing, SME green working capital financing and SME green capex financing for equipment and machinery.
The bank said it has approved more than RM411 million to SMEs under Bank Negara Malaysia's LCTF as of June this year.
RHB group managing director and group chief executive officer Datuk Mohd Rashid Mohamad said the partnership with CGC represents a major step forward in empowering SMEs to embrace sustainability.
By providing essential financial support and risk coverage, he said SMEs could adopt green practices and contribute to Malaysia's green growth agenda.
"This collaboration is vital to achieving our goal of delivering RM1.6 billion in green financing to our customers by year-end, of which we have achieved 59 per cent as at June 2024.
"We are also proud to have successfully engaged over 600 SMEs in the second quarter of 2024 to promote environmental, social and governance awareness and nurture a sustainable business ecosystem," he added.
CGC president and chief executive officer Datuk Mohd Zamree Mohd Ishak said the financial institutions and development financial institutions play a critical role in supporting the LCTF by providing financing at competitive rates.
As for CGC's role, he said it provides support by offering its guarantee thus reducing the risk for the institutions which in turn will enable them to have greater outreach to Malaysian micro, small and medium enterprises (MSMEs).
" By joining forces, we make it easier for MSMEs to secure the funding needed to adopt sustainable practices and contribute to Malaysia's economic growth. Transitioning to low-carbon operations enable MSMEs to reduce their environmental impact, enhance competitiveness and ensure long-term resilience," he said.
Recognising the crucial role of businesses in driving economic growth and their significant environmental impact, RHB said its green financing scheme provides SMEs with opportunities to invest in green and energy-efficient solutions.