Asking banks to be fair and reasonable is not the same as asking them to be easy on all loan applications — Jeyakumar Joseph

JULY 6 — I read with interest this letter “Leave the banks alone” where the writer is a retired bank executive with 33 years in the industry. 

Being someone who was in the banking industry myself for 25 years (as officer in charge of “loans” department) and currently serving as a senior Real Estate Negotiator (registered with the Board of Valuers, Appraisers and Estate Agents Malaysia) for the past nine years, perhaps I can help to clear up the misunderstanding on the matter.

Firstly, was there ever a blanket directive from the finance minister urging the banks to give “easy” financing to all applicants? As I understand it, the call was for banks to be fair and reasonable to “genuine and deserving” borrowers especially to those purchasing their first house.

Did the minister ever mention anything about loans for investment driven high end condos?

So why the over-reaction?

Secondly, is it right to put the blame squarely on our finance minister for calling on the banks to ensure a fair evaluation of loan applications from deserving first time house buyers? 

As financiers/lenders, is it not the responsibility of banks to make financing available to the rakyat?

If not the banks, where else can deserving borrowers turn to, ah longs?

Thirdly, the letter had also touched on the subprime crisis in the United States some 10 years ago. But is it correct to equate the subprime crisis in the US with the issue of giving out loans to deserving, first time house buyers in Malaysia?

Again just to clarify, the former involves granting loans to “substandard” applicants while the latter is only for “genuine, deserving” applicants!

Fourthly, the letter cautioned on the increasing household debt to GDP ratio which now stands at 83 per cent. Excuse me, who exactly are the ones who created this mess in the first place?

Wasn’t it the banks themselves who despatched their marketing teams to every supermarket in town to “ambush” innocent shoppers and passers-by to sign up for their credit card offers and their easy, pre-approved personal loan packages?

Have all the seasoned and retired bankers forgotten this?

Why were we not prudent and responsible in approving loans back then?

Fifthly, the letter proudly highlighted that the bank loan approval rates is apparently still high and in fact for SMEs it’s as high as  94 per cent. Oh really?

For someone who was in charge of submitting credit related statistical returns to Bank Negara Malaysia for 15 years, I can safely say that “approval” rate is not an accurate barometer of the actual situation.

This is because many times banks will approve a lower loan quantum/margin than what the applicant originally applied for and eventually the offer will be declined by the applicant.

But of course in the system it may be captured and reported as “approved”, which of course is not the truth.

Perhaps, what the writer should have quoted was the “acceptance” rate!

Lastly, to put things in perspective, even though the country is facing economic headwinds now, can any of us name a bank that is “suffering” badly right now?

The truth is that practically every bank in the country is reporting impressive bottom lines running into billions of ringgit. Even non-performing loan levels are still quite low.

Yet, strangely here, we have people trying to defend the “poor” banks and its top level executives who are known to earn obscene bonuses?

Honestly, hasn’t our Ministry of Finance been quite lenient with the banks by not considering to impose windfall tax on them for the exorbitant profits that they rake in when the rest of the country and its people are burning?

Yet in spite of all these the banks continue to “hold back” from giving out loans to deserving applicants both in the primary and secondary property markets and thereby going against our nation’s home ownership agenda.

In conclusion, just to reiterate, the finance minister is not asking banks to give easy loans to every Tom, Dick and Harry who walks into the bank.

He is merely asking them not to unduly tighten the screws on loan applications submitted by genuine and deserving first time house buyers.

Is there really a need to over-react to this sincere plea?

* This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.

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