Korea Credit Guarantee Fund (Kodit) will issue 40.5 trillion won worth of credit guarantees this year, including 9.5 trillion won in new guarantees, in a bid to support the Creative Economy Drive of the government by providing financial support to SMEs.
The decision was made at a meeting for regional heads on Feb. 2 at the head of office of Kodit in Shinseo-dong, Daegu, to cope with various changes in economic conditions both at home and abroad.
The regional managers at the meeting also approved the allocation of 12 trillion won worth of credit guarantees in the area for spurring economic growth, up 1.6 trillion won from the preceding year; 24.7 trillion won worth of guarantees in the area of strengthening the economic base made up of export firms, start-ups and business firms to invest in their facilities, among others, up 600 billion won from last year; and 900 billion won worth of guarantees in the area of knowledge assets and SMART fusion, up 300 billion won from the preceding year.
To make its dream come true, Kodit established a new long-term strategy under the name of “Kodit Future Vision 2020” in December to brace for changes in the business circumstance and lead the development of SMEs. It set up innovative strategies and action programs to play a bigger role and offer differentiated customer services.
It also came up with a new motto, “Happy Companies, Value Creator,” vowing to provide the best circumstances for companies in which to do business. The motto also illustrates htat Kodit will to transform from a supplier to a value creator, which helps with companies’ development.
As part of the plan, the agency will select 2,000 SMEs that will have the potential to compete on the global stage and support them by 2020. With its assistance, Kodit hopes that they will become the backbone of the country’s economy by creating more jobs and boosting the national economy.
Kodit said it plans to reform the agency’s human resources system by injecting “fresh air” into the organization. It will also develop 20 new products, which can lead the agency’s sustainable growth.
Kodit’s capital funds are the financial resources required for Kodit to maintain its public trust, to provide credit guarantee, to make payment under guarantees and to earn revenue from managing the surplus capital funds. The main sources of the capital funds are the contributions from the government, financial institutions and enterprises.
The contribution from the government is subject to change every year depending on the government's policy on credit guarantees. On the other hand, according to the Korea Credit Guarantee Fund Act (Kodit Act), all the banks in Korea have to contribute funds to Kodit. These contributions, a main systematic tool for raising capital funds, are calculated on the balances of banks for specific loans at a certain rate not exceeding 0.3 percent per annum.
The main purpose of the credit guarantee services is to enable promising Small and Medium-sized Enterprises (SMEs) without enough collateral to obtain funds and make smooth headway in the financial or business transaction. I n an attempt to meet SMEs’ demand for financing service, Korea Credit Guarantee Fund provides enterprises with credit guarantee services for the repayment of liabilities assumed by business enterprises in transactions with other companies or institutions.
By doing so, the credit guarantee services facilitate the financing of SMEs through the credit guarantees and stimulate the sound credit transaction through the efficient management of credit information.
Credit guarantee services involve a series of interactions among three parties: the guarantor (Kodit), the debtor (enterprises), and the creditor (financial institutions). If the debtor defaults, Kodit pays the guarantee obligation to financial institutions in place of the debtor.
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