RURAL CREDIT GUARANTEE FUND

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RURAL CREDIT GUARANTEE FUND (RCGF)
RCGF guarantee activity
Rural Credit Guarantee Schemes
workshop Budapest, January 12, 2006
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INCORPORATION 1994
LEGAL ORGANISATION Joint-stock company,
according to the Law no. 31/1990 Main
shareholders commercial banks
Financed by the European Union through the PHARE
Financing Memorandum RO9206 and by the Ministry
of Agriculture, Forests and Rural Development
Member of the European Mutual Guarantee
Association

• Incorporation purpose
• - to support the transition of the Romanian
  agriculture to the market economy
• to facilitate the access to credit for the
  agricultural entrepreneurs, agricultural
• product processors and for the local councils
  developing rural infrastructure
• - to stimulate the absorption of SAPARD funds
  allotted to Romania

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SCOPE OF ACTIVITY
The RCGF grants guarantees to the commercial
banks for
MEDIUM AND LONG-TERM CREDITS, LETTERS OF
GUARANTEE, LETTERS OF COMFORT (ron/foreign
currency)

• Investments in agriculture, agricultural product
  processing and rural infrastructure
• Purchase of agricultural land for production
  purpose

• Achievement of agricultural production (crops and
  animal breeding)
• Purchase of inputs for the achievement of
  agricultural production, finance of seasonal
  inventories and expenses requested by the
  agricultural product processing

SHORT-TERM CREDITS AND LETTERS OF GUARANTEE
(ron/foreign currency)

• Achievement of investments financed within the
  SAPARD Programme Measure 2.1
• Rural infrastructure development

CREDITS ISSUED TO THE LOCAL COUNCILS
(ron/foreign currency)
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The RCGF grants guarantees up to
70
of the investment credit
50
of the short-term credit
of the credit for rural infrastructure development
70
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ELIGIBLE GUARANTEE BENEFICIARIES

• Agricultural producers - individuals or
  associated in various structures - without legal
  personality, working their own agricultural land
  or the land leased them on contractual basis,
  breed animals or achieve agricultural output,
  process and sell agricultural products or carry
  on agricultural works

• Trading or agricultural companies with private
  or majority private capital, performing
  agricultural or food industry activity

• Local councils developing rural infrastructure

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The risk guaranteed by the Fund

• The non-payment by the borrower, in full or in
  part of
• two consecutive instalments, if the credit is
  repaid monthly
• the first credit instalment if the credit is
  repaid quarterly, half-yearly or in periods
  exceeding one month.
• The guaranteed risk is taken on the terms of
  initiation by the Bank of the legal procedures
  against the faulty borrower.

• Funds liability
• to pay the Bank, the guaranteed
  amount/outstanding guaranteed amount, within 10
  work days from the initiation by the Bank of the
  legal procedures against the faulty borrower.
  The Bank will initiate the foreclosure in order
  to recover its receivables, from which it will
  deduct the guarantee paid by the RCGF. The RCGF
  requests no collateral from the borrower, but a
  promissory note equal in value with the amount
  paid by the Fund.

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ELIGIBILITY CONDITIONS
The customers for whom the bank requests
guarantees should meet the following conditions

• to be local councils, agricultural producers or
  agricultural product processors

• to carry on a profitable activity, to have
  payment capacity, to be not subject to
  reorganisation or bankruptcy procedure

• as regards the reliability, to be included by
  the lending bank in standard, under observation
  or sub-standard rating categories, according to
  the legal regulations in force

• to have no overdue debts towards the state
  budget or local budgets, the special funds and
  the fund for social insurance, without the
  possibility of recovery

• to have no overdue credits and interests.

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In order to get the guarantee of the RCGF

• The credit applicant submits the documentation
  for lending to the financing commercial bank.
• The bank analyses the documentation and, if it
  agrees to grant the credit, it will fill in the
  Guarantee Request and send it to the Fund
  together with the statement of the borrower,
  enabling the access of the RCGF to the documents
  and the goods purchased from credit, and the
  guarantee file including copies of the documents
  in the credit file.
• The RCGF analyses the file and, if its
  Operational Rules are observed, it will grant the
  guarantee within maximum 7 or 15 work days,
  depending on the value of the guarantee, and sign
  the Guarantee Contract with the Bank, to the
  benefit of the borrower.
• The Bank pays the RCGF a guarantee fee for the
  guarantees granted for legal persons.
• The guarantees up to EUR 10,000 / equivalent in
  RON of said amount are granted by the RCGF
  without performing the file assessment, only on
  the basis of the lending approval, the Guarantee
  Request filled in by the Bank and Banks analysis
  report.

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RCGF guarantee portfolio
No. - EUR thou -
Outstanding guarantees as of 31.12.2004 2,886 37,415.22
Guarantees granted in 2005 3,462 49,307.88


Sources EUR 13,851 thou
Exposure 7.33 times
Default rate in 11 years 0.59
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Guarantees granted in 2005
No. EUR thou
Guarantees granted, from which 3,462 49,307.88 100.00
Production 961 22,558.54 45.75
Investments, from which 2,501 26,749.34 54.25 100.00
SAPARD, from which 156 19,898.83 74.39 100.00
- Measure 1.1 13 7,446.09 37.42
- Measure 2.1 26 4,704.79 23.64
- Measure 3.1 114 7,666.38 38.53
- Measure 3.4 3 81,57 0.41
Other investments 2,345 6,850.51 25.61