Increase In Overnight Policy Rate (OPR) Will Not Adversely Impact The Banking Sector

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Increase In Overnight Policy Rate (OPR) Will Not Adversely Impact The Banking Sector

Kuala Lumpur, Friday, 5 March 2010:- The Association of Banks in Malaysia (ABM) is confident that the Overnight Policy Rate (OPR) which has been increased by 0.25 percent to 2.25 percent from 2.00 percent will continue to be supportive of economic growth in Malaysia.

With this increase, the OPR remains low if compared to the level prior to the reduction of the OPR to its historic lows in early 2009 as a key stimulus in the face of a severe global economic downturn. ABM emphasized that the increase in OPR will not impede access to financing, nor affect the industry’s lending activities. ABM’s Executive Director, Chuah Mei Lin, said “As the Malaysian economy strengthens further, we are of the view that spending by households and businesses are likely to grow. This is supported by the stability of the labour market and increased confidence among consumers and businesses. With the overall improved growth prospects, indicators across the board point to an environment where households and businesses will continue to borrow to capitalize on growth opportunities.”

“While the banks’ respective base lending rate will be adjusted in tandem with the increase in OPR, such potential adjustments would have already been taken into consideration in cases of floating rate borrowings which are pegged to the base lending rate. Accordingly, there is unlikely to be a strain on the borrowers’ cash flow and repayment ability. Furthermore, our members will ensure that they continue to work closely with their customers to address all their financing needs. Banks are committed to doing their part to ensure that viable borrowers will continue to have access to financial products and services to carry out and grow their businesses in everyone’s interests. Banks will also be offering more competitive rates to depositors“, she went on to say.

Going forward, ABM will step up its engagement activities with business associations, chambers of commerce and members of the public to increase awareness on access to financing and financial management.

Updated List of Chargees for Executing Form 42B