SME Bank to expand role

BARELY a year after its inception, Bank Perusahaan Kecil & Sederhana Malaysia Bhd (SME Bank) is on a bid to become a broad-based financial and service centre for small and medium enterprises (SMEs) to refer to, swiftly and efficiently. 

The wholly-owned subsidiary of Bank Pembangunan Malaysia Bhd gave out loans to SMEs, but unlike commercial banks, it also provided advisory services and was actively looking to add to its growing range of services and products, either directly or through affiliated parties, managing director Datuk Azmi Abdullah said. 

“Currently, we offer term loans, revolving credit and bank guarantees,” he said. “Under certain banking regulations, we cannot operate current accounts, so we can’t give overdrafts or trade financing. But we’ve got approval from Bank Negara to create credit guarantee products for SMEs.  

“We also want to work with commercial banks so our customers can get overdrafts and other forms of financing, under both conventional and Islamic banking,” he added.  

The bank also functions as an advisory facility, and plans are already in place to expand those services from how to get loans approved to how to run a profitable business.  

SME Bank is planning to announce new tie-ups with commercial banks next month.  

SME Bank is funded by shareholders’ funds – RM1.46bil as at end July 2006. Funding also comes directly from the Government to facilitate special schemes.  

“Currently, we have 18 special funds, where the Government charges a certain interest rate and we top it up with a small margin, so that loans can be lent out at ‘soft’ rates,” Azmi told StarBiz in an interview.  

SME Bank, on its own initiative, also receives deposits from the Government, semi-government organisations and Government corporations. Additional funding is also received via issuance of commercial papers by Bank Pembangunan. 

Azmi said that under the Ninth Malaysia Plan (2006–2010), the Government had allocated RM630mil for eight new programmes, of which RM170mil will be received this year.  

Of the 18 special funds, 11 are for bumiputra businesses and the remaining seven open to all. 

Although SME Bank was recently perceived to be giving preferential treatment to bumiputra SMEs, the country has many funds that are open to all. 

These include: 

Tabung Industri Kecil dan Sederhana 2 (TIKS) offered by Bank Negara and available through all banks;  

JBIC (Japan Bank for International Cooperation) – SMI, Skim Pembiayaan Filem Cereka (SPFC) or the Film Financing Scheme; 

Tabung Usahawan Sizwazah (TUS) or the Graduate Entrepreneur Scheme; 

Tabung Pemulihan Perusahaan Kecil (Small Enterprise Rehabilitation Fund); and 

SME Bank’s own General Fund. 

Citing another example, Azmi said there was a special fund specifically for Indian entrepreneurs in Perak to boost its pottery cottage industry. “That portfolio is a revolving fund, and to date payback has been excellent,” he said.  

“The total SME market today is worth RM110bil, of which only 20% or RM22bil has been given to bumiputra businesses.  

“As such, SME Bank’s focus is on enhanced participation of bumiputra SMEs. 

“However, with RM2bil loans for approval, we are a very small participant,” Azmi added.  

He also said that the loans the bank gave out to bumiputras were for “genuine” borrowers with viable projects. 

 

 

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