KUALA LUMPUR, Jan 18 — Malaysian lenders stringently vet applicants before issuing them credit, the Association of Banks in Malaysia (ABM) said when rejecting a report claiming easy loans were driving up bankruptcy rates.
This includes evaluating the eligibility of loan applicants as well as their overall ability to repay their overall debt, the group representing local financial institutions said.
It also stressed that indiscriminate lending leading to loan delinquency was similarly undesirable for banks.
“Rigorous verifications including checks with the Central Credit Reference Information System (CCRIS) and various credit report agencies are performed before approval for loans applications are granted,” it said in a statement.
“Banks adhere to responsible financing practices in providing loans. This is to avoid exposing both the bank and the borrower to increased credit risks.”
It then suggested that bankruptcies were more a result of an individual's inability to manage their own finances rather than purportedly easy access to loans.
Commenting on continued concerns of fraud surrounding the use of debit card functions that now come standard with ATM facilities, it said while the cards function similarly to cash, there were limits and safeguards to reduce the risk of fraud and overspending.
The association was responding to a news portal's report quoting the Consumers Association of Penang (CAP) as saying that allegedly predatory lending by local financial institutions was driving consumers — particularly civil servants — bankrupt.
