SME Bank out to cut NPL ratio

Source From (Business Times): http://www.btimes.com.my/Current_News/BTIMES/articles/smeb/Article/

Published: Monday June 20, 2012
By Roziana Hamsawi

SME BANK is targeting to lower its non-performing loan (NPL) ratio to 15 per cent by the end of this year from 17 per cent currently.

Managing director Datuk Mohd Radzif Mohd Yunus said although the bank's collection rate is still considered good, it can be improved.

"Our NPLs are manageable but we are working towards improving our the ratio and with a better collection rate, we hope to lower the NPL ratio to 15 per cent this year," he said.

One of its ways to improve the loan collection rate is through collaboration with other banks that have bigger branch networks compared to SME Bank's 19 branches.

Yesterday, SME Bank signed a "payment gateway" memorandum of understanding (MoU) with Bank Simpanan Nasional (BSN), which allows SME Bank's customers to make their loan repayment at any of the 392 BSN branches nationwide with no surcharge imposed.

"We are tapping onto the vast BSN network of branches especially in rural areas to facilitate our clients to make their payments and in doing so, avoid unnecessary inconvenience," Mohd Radzif told reporters.

He said small and medium-sized enterprises (SMEs) are the backbone and key drivers of industrial development and economic growth, and in spite of all the recognition and assistance given, there are still issues facing Malaysian SMEs.

"Many still lament the difficulty in access to financing, while some face an uphill task gaining access to the market," he said, adding that SME Bank will continue to offer assistance.

He said the payment gateway collaboration with BSNmay in the future include other joint efforts in strategic areas.

BSN chief executive Datuk Adinan Maning said to facilitate the payment, SME Bank customers can open an account with BSN so that the bank can transfer the money to SME Bank through monthly deductions.

The signing of the MoU was witnessed by Deputy Finance Minister Datuk Dr Awang Adek Hussin.

In his speech, Awang Adek said the government has set a target of a 40 per cent SME contribution to gross domestic product by 2020 from the current level of 33 per cent.

Awang Adek commended the initiative between SME Bank and BSN as if helps small and medium enterprises in the rural areas to make their loan repayments without much hassle.

"We need to educate and remind those who take up loans that they must make sure these loans are fully repaid," he said adding that if not, it would affect the ability of government institutions to use their funds to help others who are in need of loans.