Banks see good prospect for SMEs sector

Banks see good prospect for SMEs sector
Business & Markets 2013
Written by Shalini Kumar of theedgemalaysia.com
Friday, 19 July 2013 10:03

KUALA LUMPUR: The Association of Banks in Malaysia (ABM) said prospects for the small and medium enterprise (SME) sector are good and that it has huge potential for growth.

“In recent months as far as SMEs are concerned, I think the banks are a lot more forthcoming and the businesses are getting a lot more access to financing. The loan application rate coming from SMEs has been very good,” said ABM executive director Chuah Mei Lin in a media briefing.

Banking institutions are the main source of financing for SMEs, representing 93.6% of the total of RM190.7 billion financing from financial institutions as at end February this year. Approval rate was at 88.2%.

Financing to the business sector continues to grow at 12.4% year-on-year as at end February this year. Total loans outstanding to business sector stood at RM420.5 billion, out of which 42.4% were to SMEs.

On serving the SMEs, Chuah said ABM is open to the possibility of starting discussions for a third phase to its Partner initiative next year.

The Partner initiative was first launched in 2010 as a way to streamline and simplify SME loan applications as well as enhance banking efficiency and customer services.

The second phase was rolled out on July 15, and its main aim is to introduce a template that will allow SMEs to understand the reasons a loan application could not be considered.

It also reduced the timeline for straight-forward loan approval by commercial banks to 43 days from 70 days previously.

“If it comes to a point where we will need to look at setting up Partner 3, it will be to enhance what is already encompassed in Partner 2 right now, such as a standardised template for loan applications, a shorter timeframe for loan approvals and more transparency in loan rejections,” Chuah said.



This article first appeared in The Edge Financial Daily, on July 19, 2013.