January 2006, Budapest Lithuanian Rural Credit Guarantee Fund Danguole Čukauskienė Director, Lithuanian Rural Credit Guarantee Fund

Rural Credit Guarantee Fund  Established in August 1997  Legal Status – Closed Stock Company, Ltd.  Share capital – EUR 1,8 mill. (Reserves EUR 13,6 mill.)  State owned (100 percent)  The Ministry of Agriculture is in charge with responsibility for RCGF creation and supervision  State is responsible for all guarantees issued by RCGF (guarantee payments are made from the reserves)

Organisational structure Board of trustees Deputy director Development and information department Guarantee department Finance department Office administrator Inner auditor Analyst Director Board General shareholder

Mission To promote the economic development of rural areas in Lithuania, providing an opportunity for business entities not having enough collateral to receive a bank credit

 Guarantees for long-term investment credits and short-term credits:  Up to 70% of the unpaid credit amount  For young farmers – up to 80% of the unpaid credit amount  Administration of the state aid:  compensation of guarantee fee  compensation of insurance premiums and loan interests to guaranteed credit beneficiaries Fund’s activities

Scheme of activities CREDIT RECEIVER CREDIT INSTITUTION GUARANTEE FUND CREDITGUARANTEE Guarantee fee payment Guarantee liabilities fulfillment Credit and interest payment Possibility to get credit Risk sharing Rural development Guarantee applicationCredit application

Scope of activities  Geographical coverage of operations - national  Co-operation agreements with all Lithuanian commercial banks (11)  Since 1st of September, 2005, - credit guarantees to other financial institutions - credit unions (64)

Guarantee beneficiaries:  Farmers, agricultural entities  Processing companies  Businesses in rural areas  Rural tourism  Services for rural population /hair dressers, footwear, apparel mending shops etc./  Small and medium sized agricultural produce processing companies /mills, bakeries etc./  Traditional crafts  Other activities in rural areas, increasing people incomes

 Maximum amount per guarantee: 116 thousand EUR per farm 260 thousand EUR per company /amount is not limited for EU supported projects/  Guarantee fee: 5,5 percent of the guarantee amount /credit beneficiary pays 1.1 percent, state compensates 80 percent/  Other conditions: Credit beneficiary shall finance 10 percent of the business project by personal assets Guarantees for Long Term Credits

 Maximum amount per guarantee: 87 thousand EUR to farmers and rural businesses no limitations to processing companies  Guarantee fee: 2 percent of the guarantee amount /credit beneficiary pays 0,4 percent, state compensates 80 percent / Guarantees for Short Term Credits

Guarantee Issuing Procedure SME/Beneficiary BANK RCGF ) The SME applies for a credit to the Bank; 2) The Bank carries out the investment project or business plan feasibility study and makes the decision on the terms to issue the credit and applies for credit guarantee to Guarantee Fund; 3) Guarantee Fund evaluates the investment project or business plan, the Board makes the decision to issue the guarantee or not. Guarantee Fund informs the Bank about its decision; 4) The SME pays the guarantee fee to the Guarantee Fund, following the signing of credit contract; 5) Guarantee Fund issues the guarantee letter to the Bank and the Bank disburses money to the SME.

Guarantee Liabilities Fulfilment SME / Beneficiary BANK Collaterals 3 1 RCGF Max. 70% of defaulted credit amount 2 1)After The Bank cancels a credit agreement with the SME, bank should first of all sell collaterals (applying to RCGF) 2) Guarantee Fund pays guarantee payment to the bank, equal to outstanding loan amount after recoveries, up to 70% of unpaid loan amount 3) Debts are recovered from the debtor(guarantee beneficiary)

Credits and guarantees, mill. EUR

Guarantees by types of activities

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