KUALA LUMPUR: Banks and financial institutions are advised not to hastily institute bankruptcy or winding up action against loan defaulters and use the action instead as the last resort.
They must be sensitive towards borrowers and act only when there are no other solutions, Minister in the Prime Ministers Department Datuk Seri Dr Rais Yatim said in his speech when opening the National Seminar on Bankruptcy: Rights and Responsibilities.
The text of his speech was read by the departments parliamentary secretary Datuk Noh Omar yesterday.
He said the institutions should not expect full recovery of their loans.
A bankrupt person must co-operate with the Officially Assignee Department and abide by the Bankruptcy Act 1967 to solve cases, he said.
It is the departments duty to help reduce the economic impact by liquidating the individual's or companys property which was dissolved and allocate the returns fairly to the creditors, he said.
In this manner, he said that bankruptcy disputes could be settled in an orderly manner and the liquidation process would help reduce non-performing loans.
The Officially Assignee Department, under the Legal Affairs Division in the Prime Ministers Department, is responsible for administering and allocating the bankrupts property to creditors efficiently and fairly.
Officially Assignee Department director-general Datin Fauziah Mohd Ramly said that bankruptcy cases had increased by 10% yearly since 1996.
Until December, 104,770 cases were filed, she said, adding that, in view of this, the department would implement a computerised system linking its branches nationwide by end of the year. Bernama