Investment- Backed Guarantees
Derisking loans to the agric and renewable energy sectors with investment-backed guarantees to Participating Financial Institutions (PFIS)
Guarantees are used as security enhancement and interest reduction mechanisms for borrowers. When banks require lenders to secure loans, and an acceptable security is difficult to come by, guarantees are a way to overcome this difficulty. Moreover, guarantees mitigate the risk profiles of borrowers and this reduces the risk premium Participating Financial Institutions (PFIs) places on borrowers. The RDF offers a cover of 50% of losses on qualified term loans and loan portfolios. All guarantees are backed by the RDF’s indemnity fund. The guarantees that the RDF provides are investment backed guarantees.