Under the proposed Scheme, the Govemment will act as the guarantor for SMEs' loans approved by lending institutions. In addition, we will deposit with the lending institution, if it so requests, an amount equivalent to the amount of the guarantee so that its loan to deposit ratio will not be adversely affected by the loans to SMEs under this Scheme. We believe that this should help ease the tight liquidity of die banking system. The proposed framework of Me Scheme is described below. Government will rely on lending institutions to exercise their usual prudent professional judgement in assessing applicants' creditworthiness.
Loan applications are subject to the usual prudent scrutiny by the lending institutions.
Other than those limitations on the use of the loans which may be imposed by the banks, the Scheme will not impose limitations on the specific uses of the loans. The loan may be offered as a term loan or in the form of a new credit line. The guarantee period is up to a maximum of 365 days. The lending institutions will determine the interest for the loans they offer to SMEs in accordance with their established principles and Government will not intervene in such commercial decisions. Director of Accounting Services will be responsible for the administration of the Scheme on the part of Government and will be the Vote Controller of the Scheme.