INCREASE IN SME LOANS APPROVALS – LOANS FOR SMALL MEDIUM ENTERPRISES

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The Association of Banks in Malaysia (ABM) said contrary to the perception that lending is being limited, there had, in fact, been an overall increase in small and medium enterprises (SMEs) loans approved was at Dec 31, 2008 compared with a year ago.

ABM was responding to a StarBiz story on Tuesday entitled “Financing Blues” that companies, including SMEs, were finding it hard to get loans.

ABM chairman Datuk Seri Abdul Hamidy Abdul Hafiz said: “There is also no evidence from member banks of any unusual increase in SME loan application rejections last year.”

He added that at times, there was a lag period between loan submissions and disbursements because applicants might have handed over incomplete submissions.

He stressed that prudent lending practices needed to be adhered to in order to maintain public and investor confidence in the local banking system.

“Key drivers remain unchanged … there is ample liquidity in the system and the banks’ ability to lend remains undiminished,” he said in a statement.

Hamidy said that in some instances, customers did not fully utilise the lines of credit by lender banks and it became the bank’s prerogative to reduce such lines as part of ongoing loan reviews.

This was in order that the excess could be used to better impact other lending activities.

He said SMEs with insufficient collateral could seek guarantees from the Credit Guarantee Corp to better enable them to obtain financing.

“Banks are committed to stimulating loan disbursements. For instance, Bank Negara’s latest overnight policy rate cut in November was quickly adopted by ABM members, with base lending rate (BLR) falling from 6.8% in July to as low as 6.25% as of December 2008,” Hamidy said.

He said the cost of borrowing pegged to BLR had been reduced, so the issue of banks ignoring the plight of businesses and making it difficult to get loans was inaccurate.