“At the rate it is going, I don’t think the funds will last. Probably by early-May, we will finish the funds that we have, ” said RHB Bank Bhd group business and transaction banking head Jeffrey Ng(pic).
PETALING JAYA: Funds allocated for the Special Relief Fund (SRF) could be depleted by early May as more small and medium enterprises (SMEs) apply for the loans to cope with their cash flow burdens.
As at April 26, about RM4.5bil of the SRF funds have been approved by various banks to some 8,500 SMEs.
“At the rate it is going, I don’t think the funds will last. Probably by early-May, we will finish the funds that we have, ” said RHB Bank Bhd group business and transaction banking head Jeffrey Ng.
Under the second stimulus package, Bank Negara increased the allocation of the SRF to RM5bil to provide relief assistance to more SMEs who were affected by the Covid-19 outbreak. The financing rate was lowered to 3.5% and the fund will be made available until Dec 31.
Notably, there have been a lot of complaints from companies on the difficulties in getting their applications approved as strict criteria and bottlenecks continue to hinder funds from being disbursed to the SMEs. Additionally, SMEs have noted that banks do not have a standard set of criteria for the SRF and that many of them were selective in approving the loans.
“I think most banks are lending to new and existing customers. Of course, we cannot deny the fact that if a bank knows a customer better, then it is easier to lend to that customer. Even in business, if you know the buying behavior of a person, you are able to extend better credit terms to them.
“So it is the same with banks. A bank will obviously feel more comfortable with their existing customers but we are lending to people who are new to us as well, ” said Ng.
To-date, RHB has approved about RM500mil under the SRF, of which half of them are loans to new customers.
However, Ng acknowledged that the speed in disbursing the funds could be greatly improved.
“The SRF was announced at the end of February, but we could only practically get it out by the first or second week of March, which was about a week before the movement control order (MCO) took effect. The restrictions created a lot of challenges for the SMEs because many companies realised they didn’t have the documents to send to the banks.
“From a bank’s perspective, we also had our challenges. We do realise that the banking industry needs to go further in enabling a more robust remote application and fulfillment model. And this is something I think a lot of organisations will need to think about after the MCO. There is room for banks to improve on their efficiency, ” he added.
https://www.thestar.com.my/business/business-news/2020/04/29/rm45bil-srf-funds-approved-for-some-8500-smes
