Mauritius creates corporation to support companies without collaterals

The Mauritian Cabinet has approved the creation of the National Guarantee Corporation Ltd to provide corporate guarantees to financial institutions, including commercial banks.

Its main aim is to expand the lending capacity of these institutions to support viable companies with inadequate collateral.

The government-backed initiative is a response to the economic challenges caused by the COVID-19 pandemic, which have hindered promising companies lacking sufficient collateral from accessing financing.

Through corporate guarantees, the National Guarantee Corporation Ltd will reduce risks for financial institutions, enabling them to provide much-needed funds to these enterprises. 

However, critics express concerns about the potential risks associated with providing loans without adequate collateral, and it remains to be seen how the National Guarantee Corporation Ltd will address these concerns and protect taxpayer funds.

Source: Cabinet Papers