Notwithstanding that the political changes in 1990 created a number of new opportunities in Hungary, the access to finance for small and medium-sized enterprises operating in the countryside, in particular in agriculture, has remained restricted. Due to the initial problems of the bank system being established at that time and the collateral difficulties of enterprises, financial resources could not reach the appropriate destination as needed.
Having recognized this situation, in 1991 the European Union initiated to establish the Rural Credit Guarantee Foundation by substantial capital in the framework of the PHARE Programme. The Foundation was established by the Ministry of Agriculture and five banks, in particular:
Budapest Bank Rt
Magyar Hitelbank Rt
Országos Kereskedelmi és Hitelbank Rt
From 1993 to nowadays, banks, credit institutions, independent savings co-operatives and a number of savings co-operatives which are members of the savings co-operatives' integration (OTSZ, TÉSZ, REPIVA) have joined the Foundation. From 2006, the opportunity to co-operate with the Foundation is open also for financial enterprises engaged in financial leasing and factoring activities.
Since 1 January 2008 the Rural Credit Guarantee Foundation has been operating as a financial enterprise and later the Hungarian Financial Supervisory Authority (PSZÁF) acknowledged after the necessary approval procedure that the operation of the Foundation as a financial enterprise complies with the criteria relevant for credit institutions, so PSZÁF authorized its operation as a "financial enterprise equivalent to banks" from 1 January 2011.
In the first phase of our operation the proportion of guarantees granted for loans related to agricultural production was higher owing to schemes related to state subsidies. After Hungary's accession to the European Union, guarantees for rural development loans represented a higher and higher proportion in our portfolio due to limited agricultural subsidies and owing to the EU measures focusing on rural development.
The Hungarian State grants 85% full counterguarantee for guarantees claimed by the Foundation.