Covid-19: After MCO, SME survey finds banks are sleeping!

Covid-19: After MCO, SME survey finds banks are sleeping!

PUCHONG: A survey by Business Sustainability Taskforce Covid -19 a coalition of small and medium enterprises (SMEs) revealed the government effort to mitigate the impact of the pandemic, may not yield the desired results due to ineffective measures by financial institutions.

The survey which studied SME sentiments found that 76% of 4,073 SMEs and SMIs whose applications were approved were existing customers.

The task force spokesman Shahul Dawood said the banks are picking and choosing the customers who should be given this SME loan thru their business as usual stringent policy.

Shahul said this is an exceptional crisis and warrants exceptional response but the new customers are either given a maximum of RM250,000 or outright rejected.

“Why the discrimination?” he said in a statement, citing the government efforts to support the SME business community has been derailed by the financial institutions.

It’s very saddening to see financial institutions has failed to act on the direction set by BNM. They are not helping the government nor the public,” he said.

Shahul also claims the banks were refusing to help companies whose financial cycle had yet to mature, or who were relatively new in the market.

Among the issues raised by the SMEs in the survey, the banks were still using the central credit reference inference information system (CCRIS) and credit scoring system (CTOS) is a barrier for SMEs.

CCRIS is a centralised system under Bank Negara Malaysia which collates data on outstanding loans and payment history over the past 12 months.

CTOS meanwhile is a leading credit reporting agency.

The survey details further revealed banks were taking their time to approve loans, with initial approval rates at only 5%, meanwhile 65% of applications were still pending with some 30% rejected.

Shahul said it is imperative to inspire confidence among the SME community which is fast running out of cash and resources.

He plead to the finance ministry and central bank to give clear directives to the banks on approving loan applications so that they would be in sync with each other.

“We plead to MOF and BNM to act immediately by giving clear mandate to financial institutions. We seek that government use a ‘single window’ approach to standardize and track all the applications and parameters like approval rates, turnaround time, amount disbursed etc.”

“We are clearly against time and hope the government will lift us up from this difficult time.

By: Hema Subramaniam