MOSCOW, March 6, (RIA Novosti) - The Russian government could select an authorized bank in early 2007 to issue guarantees for small businesses, a senior government official said Monday.
Andrei Sharov, head of state regulation department at the Ministry of Economic Development and Trade, told a Moscow conference the government would most likely hold a tender early next year to choose the bank.
According to Sharov, in 2005 the government approved a program to develop a system of guarantees for small businesses. Banks frequently refuse loans to small companies due to an absence of adequate collateral, he told the "Financial Services for Small and Medium Business" conference.
Under the government program, banks, insurance companies or regional pledge trusts issue guarantees or sureties to small businesses to compensate for a shortfall of collateral. The state then refunds 90% of the cost of this service.
However, the government has decided to move to a more traditional scheme in this area and opt for an authorized bank to issue guarantees, without lending money to small enterprises, Sharov said.
"This will be a sort of social responsibility borne by a state bank, as its costs will be comparable to its profit," he said.
Sharov said the authorized bank would be entitled to government subsidies amounting to 50% of the value of guarantees, and that such bank would earn money by charging interest on provision of guarantees.
