Banks to play critical role through lens of '3Rs'


KUALA LUMPUR: Finance Minister Tengku Zafrul Abdul Aziz said the banking industry is expected to operate through the lens of the "3Rs" - recovery, resilience and reform - in aid of the economic recovery as well as in promoting sustainable business practices.

This was in line with the key thrusts of Budget 2022, which will remain expansionary and conceptualised as a recovery budget.

"2022 will be a critical year for Malaysia, a rare window to jumpstart not just an economic recovery, but a recovery of industries, livelihoods and jobs, especially those hit hardest by the pandemic," he said during his keynote address at the Malaysian Banking and Finance Summit 2021.

"As the health of the financial sector is tied to the wider economy, it is crucial that the banking industry doubles down on driving a strong economic recovery while supporting business continuity, especially in jumpstarting businesses when the economy reopens."

In this respect, Zafrul said the banking industry is expected to offer accommodative financing and repayment terms to facilitate lending to businesses.

This includes participation in the offering of the iTEKAD programme that supports microentrepreneurs to start and sustain their business.

The most underserved segments of borrowers, including the hospitality sector, micro-enterprises and women entrepreneurs, should be supported with various financing schemes, he added.

Banks are also expected to provide non-debt-based facilities such as the CAKNA and Jana Niaga liquidity schemes that relieve cashflow constraints of SMEs without increasing their gearing positions.

Digital payments should be encouraged, said Zafrul, of which includes the onboarding of small merchants to accept QR payments and ensuring affordable merchant fees.

In supporting the second thrust of Budget 2022, "resilience", banks are expected to support businesses as they transition to the needs of the new normal.

This includes supporting clients in embracing digitalisation in their business focus and operations, enhancing the role of financial intermediation throughout the business cycle of any enterprise, as well as exploring alternative forms of financing.

"These efforts will complement wider initiatives by the Government including the National Fourth Industrial Revolution Policy (4IR), where digitalisation and technological adoption are crucial in boosting our economic prospects and resilience, in accordance with the Malaysian Digital Economy Blueprint," said Zafrul.

Lastly, the Finance Minister urged more Malaysian financial institutions to revaluate the way they operate as more must be done towards supporting the climate and sustainability agenda.

"As a mobiliser of capital, the banking industry is key in facilitating the transition of companies towards low carbon and sustainable practices via financing and investment beyond the pandemic, be it supporting renewable energy adoption, new technologies or novel ways of doing business," he said.

He noted that more than 45% of the global banking industry have signed up to the UN Environmental Finance Initiative’s Principles of Responsible Banking. Out of these, 44 of them have formed a Net-Zero Banking Alliance, planning to fully decarbonise their loan books.

Zafrul said Budget 2021's inclusion of the UN Sustainable Development Goals will continue in Budget 2022 as well as through wider initiatives like the SDG-aligned 12th Malaysia Plan and the Shared Prosperity Vision 2030.

Meanwhile, Zafrul highlighted that the government in concert with Bank Negara and the insurance and takaful industry is in the final stages of rolling out the Perlindungan Tenang Voucher programme.

The programme will provide financial assistance to up to 8.4 million Bantuan Prihatin Rakyat recipients in purchasing insurance and takaful coverage from licensed providers, he said.

He added that in the long run, the government and Bank Negara will continue to stress the importance of financial literacy and sound financial decision making via the various efforts under the Financial Education Network.
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