Kuala Lumpur, Friday, 23 March 2018 – With reference to the recent article in The Star titled “Banks are losing their premium”, The Association of Banks in Malaysia (ABM) would like to clarify that there are several key processes involved, such as completion of security documentation and compliance of terms and conditions, from the time a loan is approved to the disbursement of the loan sum to the borrower. The duration required to complete these processes would depend on the type of loan and its security structure.
In the case of a clean and unsecured loan, the processes are very straight forward and would usually not require a long turnaround time from approval to disbursement. Conversely, loans that are backed by property may require the consent from relevant authorities / third parties that are outside the control of the banks. Further, cases which require certain conditions precedent to be met may involve a longer processing period after the loan has been approved by the bank and before the loan can be disbursed.
Examples of situations where there may be perceived delays in loan disbursements include:
- property loans where consent to transfer/charge is pending;
- cases where the consent of existing debenture holders is required for collateral to be shared by other creditors; and
- outstanding issues on the part of the borrower, which may include pre-disbursement conditions not being met (e.g. increase in paid up capital, execution and submission of relevant documents, settlement of legal fees/expenses before the solicitors send the Advice of Release, etc.).
It is not in our member banks’ interest to delay the disbursement of loans as it lengthens the processing time, leads to inefficiencies and jeopardises the relationship with their customers. Moreover, from a revenue perspective, the banks would not be able to recognise any income from the loans until the funds have been disbursed to their customers.
Our member banks are committed to support SMEs in their business and are constantly looking at ways to further reduce the turnaround time for disbursements of loans to SMEs, especially in light of the increasing approach towards digitalisation.
SMEs which are in search of loans/financing are invited to explore the new online ImSME platform, www.imsme.com.my, which was developed by Credit Guarantee Corporation Malaysia Berhad (CGC) and supported by Bank Negara Malaysia. The portal serves as an online referral platform for SME loans/financing and is aimed at bridging the SMEs’ loan/financing needs by broadening their access to an array of loan/financing products and service options that are offered by participating financial institutions and agencies.