Gyeonggi Credit Guarantee Foundation (GCGF) has extended a credit guarantee service in an aggressive manner to smaller companies to help tide them over financial difficulties amid the economic slowdown, a top manager of a credit guarantee foundation said.
"Since I took office in January 2005, I have exerted all-out efforts to help small and medium-sized companies and small business owners suffering from the financial pinch by extending enough credit guarantees," said Park Hae-chin, chairman and president of GCGF.
"In 2000 before I became the head of the GCGF, the foundation's extension of credit guarantees came to W373.9 billion [US$298.7 million]. However, I tripled the volume of credit guarantees to a total of W1.001 trillion [US$799.8 million] in 2008," said Park. The total broke down into W643.3 billion (US$514.0 million) for small and medium-sized companies and W358.5 billion (US$286.4 million) for small business owners.
Thanks to such brilliant business achievements, GCGF won a top grade in the appraisal of public institutions in Gyeonggi Province for the third consecutive year. In the appraisal, GCGF received an "A" grade in institutional assessment and an "S" grade in CEO estimation.
In an interview with the Korea IT Times, he said, "We will not satisfy the appraisal results. By offering a tailor-made guarantee service to customers continuously, we will become a top-class comprehensive credit guarantee institution leading smaller companies and small business operators."
Thanks to active extension of credit guarantees, the market influence of GCGF expanded to 14.5 percent in Gyeonggi Province, he said.
"In particular, GCGF strengthened its assistance for small-scale business owners by extending W204.2 billion [US$163.2 million] in credit guarantees to 20,500 business operators last year, exceeding its earlier project of W200 billion [US$159.8 million]," said the top manager.
Improvement of Business System
"In 2005, small business owners' complaints of GCGF hit the highest level, and there were a number of civil petitions owing to our foundation's fragile manpower structure and shortage of specialty. To tide over such difficulties, I suggested the GCGF's future vision and pushed for the organization's reform through innovation of the consciousness of executives and employees," he said.
"At the same time, I introduced a business appraisal system to touch off competition among employees with good intentions and promoted their management mindset, while actively fostering professional manpower suitable for the characteristics of a financial institution," said Park.
For instance, we introduced such advanced systems as MIDAS and CCRS to improve the screening system and simplify documents that borrowers should submit, he said.
"Along with this, we expanded the number of branches from six to 17, enabling customers to visit GCGF conveniently anywhere. Moreover, we established a room for small business owners in GCGF branches as part of our efforts to provide customers with the best services," said the top manager.
"In addition, we carried out a survey of our customers regularly and made our best efforts to satisfy their growing demands through feedback in order to solve their difficulties in the course of using GCGF," he explained.
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Operation of Debt Collection Team
From 2007, GCGF began to operate a debt collection team, which is in charge of withdrawing non-performing loans.
In 2008, it withdrew about W28.3 billion (US$22.6 million) in bad loans through active debt collection activities. The scale of its withdrawal of non-performing loans expanded from W12.1 billion (US$10.0 million) in 2004 to W20.3 billion (US$16.2 million) in 2005, W27.7 billion (US$22.1 million) in 2006, W27.3 billion (US$21.8 million) in 2007, and further to W28.3 billion (US$22.6 million) in 2008.
"Despite the global financial turmoil in 2008, it kept the subrogation rate at 1.7 percent, attaining the two managerial achievements of expansion of credit guarantee and maintenance of soundness," said Park.
"Through such successful management, GCGF saw its deficit reduce from W32.8 billion [US$26.2 million] in 2004 to W6.6 billion [US$5.3 million] in 2005. Finally, it posted a W2.8 billion [US$2.2 million] surplus in 2006 for the first time," said the top manager.
Proclamation of Emergency Managerial System
To ride out the current uneasy business environment of the global economic slowdown combined with the unstable exchange rate and a rise in commodity prices, GCGF and its labor union concluded an agreement on an emergency managerial system.
"Under the pact, GCGF will stage a campaign to freeze wages of all executives and employees and reduce budgets and unnecessary expenses," the top manager said.
It established a briefing room for emergency work to tide over the crisis in the GCGF headquarters and extended the working hours of weekdays from 8:30am to 8:00pm.
It also plans to improve appraisal systems, including CCRS, to provide customers with better guarantee services, said Park.
"Along with this, we are making our best efforts to activate the regional economy by making the best use of the W1.5 trillion [US$1.2 billion] worth of Gyeonggi Province's funds to foster small and medium-sized enterprises," he said.
Greater role of GCGF
GCGF plans to expand the financial sources of credit guarantees for small and medium-sized companies through the powerful revision of relevant laws and regulations in such a way as to raise the obligatory contribution ratio of existing financial institutions from 0.02 percent to 0.08 percent.
"To promote the efficiency of the credit guarantee business, we also plan to develop the CCS, an appraisal system for corporate credit, into an advanced one that can conduct objective and transparent credit appraisal," said Park.
"At the same time, as a means of helping enterprises reduce their inconvenience in attracting credit guarantees, GCGF will simplify the procedures of credit assessment and documents for submission in the future," said the top manager.