This case study on the CALF-PCIC guarantee seeks to determine the usefulness of the credit guarantee as a collateral substitute. For this purpose, the experience of a private development bank branch and some of its borrowers in the CALF-PCIC credit guarantee scheme are documented and analyzed. The study notes some problems about the acceptability and usefulness of the CALF credit guarantee as collateral substitute and documents the factors that hinder its use, as well as the necessary factors for it to work as collateral substitute. The study also sought to validate the findings of an earlier ACPC study, which showed that the guarantee mechanisms have a potential to encourage financial institutions to lend to the agriculture sector and to substitute, at least partially, for collaterals normally required by banks.
