COMMENT | Tok Pa, please speak to Bank Negara
COMMENT | Minister in the Prime Minister’s Department (Economy) Mustapa Mohamed has reminded banks to do more to help rebuild the economy, with particular attention to helping small and medium enterprises (SMEs), which have been disproportionately affected by the pandemic.
This reminder from the minister is timely, and I like the forceful way he presented his speech. He wanted the banks to do more to help alleviate poverty and the difficulties suffered by small businesses.
This is the new Tok Pa we have been waiting for a long time.
However, banks in this country tend to be too subservient to Bank Negara Malaysia. Our central bank is not just a lender of last resort, nor sees itself as limited to controlling inflation and setting the monetary and fiscal policies.
On a macro basis, of course, Bank Negara will need to...
COMMENT | Minister in the Prime Minister’s Department (Economy) Mustapa Mohamed has reminded banks to do more to help rebuild the economy, with particular attention to helping small and medium enterprises (SMEs), which have been disproportionately affected by the pandemic.
This reminder from the minister is timely, and I like the forceful way he presented his speech. He wanted the banks to do more to help alleviate poverty and the difficulties suffered by small businesses.
This is the new Tok Pa we have been waiting for a long time.
However, banks in this country tend to be too subservient to Bank Negara Malaysia. Our central bank is not just a lender of last resort, nor sees itself as limited to controlling inflation and setting the monetary and fiscal policies.
On a macro basis, of course, Bank Negara will need to control interest rates by controlling the cost of borrowing and lending throughout the economy. But our Bank Negara suffers from the same "hang-ups" as other government institutions.
They need to show and assert authority, to show who is the boss. They don't trust people generally except the VIPs. They don’t even trust those who are reporting to them.
They like to control and extend their overreach when it is not necessary. To get the banks in this country re-energised in helping the lower-income groups, Tok Pa (above) needs to have tea with the governor and her team.
Bank Negara has to buy in on what Tok Pa and the government are planning for the economy. It's one thing to insist on a suitable deposit ratio so that banks do not go helter-skelter with their lending, but it's not necessary for Bank Negara to micromanage the banks and inhibit the move forward.
I can only offer anecdotal evidence to give you a clue of the mindset of our Bank Negara. I went to a local bank and wanted to open an account for my farm in Kelantan. The farm is small and not producing anything just yet.
After waiting weeks on my application, I was told that they needed to get clearance from "higher-ups" because apparently, I was a politically connected person. I told the officer I was no longer holding any position in any political party.
I had retired from active politics for many years. I am just a political commentator. I write on my Facebook, as a therapy. He said he needed to comply with Bank Negara guidelines. I was never involved in any big deals where money changes hands.
Never was I involved in money laundering. So why do they need to be "so thorough" for a retired man to open an account for his coconut farm? Another Bank Negara guideline.
I owed a local bank some money (like 10 percent of Rina Harun’s debt to the French company) because I was spending too freely on my credit cards. The bank CEO kindly agreed for me to pay in instalments.
An agreement was signed, and I have been diligent in paying the bank without fail. But the bank tells me they still have to keep me on "a Special Attention Account, a watch list" until the debt is fully paid.
Despite the settlement, the Bank Negara circular dated May 25, 2006, imposed on all banks participating in CCRIS (Central Credit Reference Information System) to report “delinquents” like me. The whole country now knows of my financial situation. I doubt I can get any loan now, post-Covid.
I thought someone who is diligent and wants to pay his debt should not have to suffer “blacklisting" and humiliation, but support instead. However, Bank Negara knows better what is good for the country. People like you and me do not matter much.
My friend narrated this story. He has a daughter who works in bank A. She later applied to join bank B. Having been accepted by bank B, she left bank A. In doing so, she failed to give a three-month notice to bank A. Bank A reported to Bank Negara of this contractual mishap, and Bank Negara then informed bank B of the matter. Bank B now revoked the offer to this young girl, and she is now unemployed.
I am perplexed how a contractual matter of this nature can attract the involvement of the nation's central bank.
Many years ago, I was a student in London. I had a current account with Lloyds Bank. Sometimes I issued cheques without realising if I had enough money in my account. I was never careful about finance. I did not realise my bank balance was short by a few pounds.
The bank manager would always call me to top up, and I told him the delay was due to Mara not remitting my monthly loan money promptly. But he would always clear the cheques. I was not blacklisted, not even once.
The British banks do trust their customers perhaps more than the banks here. Maybe because the Bank of England does not get involved in petty stuff and banks are not over eager to blacklist anyone who could turn out to be their good customer one day.
So you see, Bank Negara has a watchful eye on everything that's going on in the banking industry.
So Tok Pa needs to have a serious discussion with Bank Negara if he wants the banks to have a new lease of life to help the country.
Unless Bank Negara is willing to take a fresh look at its role in the new post-Covid world and revamp some of its current guidelines, Tok Pa’s advice will not mean much to the rakyat.
ZAID IBRAHIM is a former de facto law minister.
The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.
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