This followed remarks by the Consumers Association of Penang (CAP), which said on Monday that the huge number of Malaysians involved in bankruptcy cases could be partly attributed to the ease with which civil servants can obtain loans.

CAP president SM Mohamed Idris said financial institutions and cooperatives that provide loans to civil servants rarely cross-check the background of their applicants.

“Therefore, an applicant who is eligible for a RM50,000 loan could apply to four financial institutions and end up borrowing a total sum of RM200,000,” he had said.

However, ABM said the verification processes carried out by its member banks included checks with the Central Credit Reference Information System (CCRIS) as well as various credit report agencies.

“Banks adhere to responsible financing practices in providing loans. This is to avoid exposing both the bank and the borrower to increased credit risks,” it said in a statement.

“Our member banks also view fraud very seriously and if falsifications are detected, banks will take immediate steps to address the issue and reject the application.”

On the matter of bankruptcy, ABM said members of the public should spend prudently and within their means to avoid being caught in a financial quandary.

“This also applies to having careful planning with regards to using facilities such as debit cards and other payment cards,” it added.

Easy access to loans contributes to bankruptcy, says consumers group