KUALA LUMPUR: Bank Negara Malaysia (BNM) says Lembaga Tabung Haji (LTH) has taken steps to strengthen its risk management practices to reinforce a sustainable and healthy financial position.
The central bank said on Tuesday LTH has “proactively taken appropriate measures to further strengthen its risk management practices, both on its own initiative and in response to earlier engagements with the bank (BNM).
“These will reinforce a sustainable and healthy financial position of the institution going forward,” it said.
BNM added that Lembaga Tabung Haji was not under its direct supervision. However, advisories issued by BNM to non-bank financial institutions were aimed at ensuring the institutions would continue to be well managed and effectively perform the role for which they have been established.
“This in turn will contribute to financial stability,” it said.
BNM said as part of its mandate to promote financial stability, it undertook surveillance on significant non-bank financial institutions that have important interlinkages with the financial system.
This is supported by the establishment of the Financial Stability Executive Committee (FSEC) under the Central Bank of Malaysia Act 2009 which is chaired by the Governor and whose members include the Secretary General of the Treasury, the Chairman of the Malaysia Securities Commission, the Chief Executive Officer of the Malaysia Deposit Insurance Corporation and an independent external member.
BNM said based on the bank’s surveillance, the Bank and the FSEC might, from time-to time, issue advice to significant non-bank institutions as a pre-emptive measure to promote the sound financial standing of such institutions and avoid any systemic implications on the financial system.
On Tuesday, an online portal reported that LTH reserve levels are in the negative and that the pilgrim fund board will not be able to pay its 8.8 million depositors unless it liquidates its assets soon.
The claims were allegedly based on a letter dated Dec 23 sent by BNM governor Tan Sri Zeti Akhtar Aziz to LTH chairman Datuk Seri Abdul Azeez Abdul Rahim.
Zeti was also reported to have delivered a separate letter to Minister in the Prime Minister's Department Datuk Seri Jamil Khir Baharom on the same day warning him of negative repercussions due to the fund’s dire financial state.
She had also proposed that LTH formulate and present to BNM a comprehensive reserve policy by March 3.
According to the report, LTH only has 98 sen in assets for each ringgit in liability. The board is legally unable to announce yearly dividends if it has more liabilities than assets.
On a Facebook post on Monday, LTH advised depositors not to make speculations on the date of announcement of dividends as the fund had to first ensure that the preliminary auditing process was completed and given approval.
It added that dividends are usually announced between January to March.
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