Be more flexible, business group tells state-owned bank

The Malaysian Indian Business Association (Miba) has called on state-owned Bank Simpanan Nasional (BSN) to review some of its existing guidelines and to be more flexible in the disbursement of loans.

Miba president P Sivakumar said BSN was recently capitalized again by the government to assist small businesses under the scheme Micro Financing (Temaniaga) with virtually no collateral.

The loan offer ranges from a minimum of RM5000 to RM50,000.

However, Sivakumar said 'innocent' loan applicants were being turned down on the grounds that they were 'blacklisted'.

"So what is BSN's role especially having been funded with public money, is it modeled similar to a commercial bank or is it one with special purposes such as alleviating poverty?" he asked in a statement.

"Hundreds or thousands of potential loan seekers are blacklisted by banks but the sad part is that hundreds of innocent victims have also been blacklisted for being guarantors," he said.

Sivakumar said BSN should reach out to these people because they were not defaulters of any borrowing but victims of circumstances.

"Miba has learnt that some of them are paying as much as 25 percent of their income to loan sharks and have no other means. Some of them are even single mothers," he added.

Reduce interest rate

Citing one of the guidelines for loan approvals which states that an applicant should have a minimum of two years business registration, Sivakumar asked: "Of what help is that?"

"Why can't it be that business registrations be a minimum of three to six months. It is after three months that most businesses would want to apply for loans in lieu of expansion and not two years when it has already succeeded," he said.

Sivakumar also urged BSN to consider reducing its 'considerably high' interest rate of10 percent per annum.

"In view of the global economic slowdown, BSN could play a crucial role in the creation of new business enterprises, which would open more doors for employment opportunities for locals.

"BSN has an objective of a social entrepreneur role They should alleviate poverty and ensure that the small businesses reduce their borrowing and dependence on loan sharks at the same time to improve economically," he said.