SME group protests over rejection of loans under stimulus package

Shahul Dawood, spokesperson for a special task force for SMEs (Facebook pic)

PETALING JAYA: A group of small-medium entrepreneurs and industries tonight claimed that several banks are rejecting loans applied under the recently announced stimulus package meant to cushion the impact of Covid-19 on the economy.

The Covid-19 Special Task Force Secretariat for SMEs, SMIs, NGOs and Entrepreneurs said several of its members had their applications for such loans rejected.

Last month, Bank Negara Malaysia said it set aside RM3.3 billion for small-medium enterprise (SME) financing as part of the stimulus package.

BNM said SMEs may access three of its financing facilities, namely the Special Relief Facility (SRF), Agrofood Facility (AF) and SME Automation and Digitalisation Facility (ADF).

But the secretariat’s spokesperson Shahul Dawood said the “reality on the ground was different”.

“We have called up seven local financial institutions and all our members got the same response. We were rejected on the grounds that there is no directive from the top and many were reluctant to come forward to help proactively.

“There seems to be a disconnect between the government and the banks,” he said in a statement.

Shahul said that Putrajaya’s intention to ensure the economy moves ahead is being derailed by the “seemingly apathetic” financial institutions.

Financial institutions, he went on to say, had the “fiduciary duty” to their shareholders to ensure profitability and manage the portfolio risk.

The “business as usual” approach by the institutions, he lamented, would bring the economy to a grinding halt.

He urged the finance ministry and the central bank to instruct the banks to cooperate with the business community.

“Otherwise we are headed for a free fall very soon.”