Creating Greater Access for Micro Loans

One of the major complaints from the Indian community is that the Indian business community especially the small and micro business people find it difficult to secure loans to start or enlarge their business

While the Federal government has opened up opportunities through Amanah Ikhtiar Malaysia and Yayasan Tekun for the micro players in Indian community, the total outreach is still small. Therefore SITF explored the opportunity to enlarge these through various discussions with the Ministry of Finance and the Central Bank.

A number of initiatives were organized in this context:-

Roundtable Discussion on Access to Micro Credit

The SITF Chairman, Datuk Dr Subramaniam Chaired a Roundtable Discussion on Oct 29, 2010 which was attended by a number of banks, development finance institutions and representatives of the Indian community from SITF, Chambers and business associations.

Representatives of Bank Agro, CIMB, Bank Rakyat, BSN and Bank Negara shared on available micro credit programs. The community representatives highlighted the difficulties faced by the community in accessing them. The Financial institutions emphasized that the potential borrowers must fulfill their requirements.

The issue is are Indians being discriminated because of their ethnicity or because many of the potential micro business people are not prepared with basic ability to prepare a business plan or possess the basic requirement such as business license, bank account, tax returns to show cash flow.

In addition credit track record and credit history is another major factor as many could have been black listed. Non payment or delayed payment of phone bills and utility bills might also be used to verify credit track record.

It was felt that in addition to access to credit through financial institutions, social preparation or brining the informal micro Indian business person into a state of economic preparedness is most essential.

Discussions with Bank Negara

Two meetings were held at Bank Negara by way of following up matters discussed at the RTD. These meetings were chaired by Mr Thomas Tan from the Development Finance Enterprise Department and held on Nov 4 and Nov 11, 2010

Through these discussions it became clear that the community:

• Must work closely with the following financial development institutions to ensure greater access for micro business people.
• Must access Agro Bank, BSN and Bank Rakayat’s micro finance program of financing up to RM50, 000. This is one such initiative the community must tap to enlarge its opportunities.
• Must explore the potential of the Cooperatives as a vehicle for socio-economic transformation.
• Must forge a clearer working relationship with the Ministry of Housing & Local Government in securing business licenses for micro business which is one criteria for loans

Dialogue with Cooperative Commission of Malaysia (SKM)

A special dialogue was held on Nov 25, 2010 with SKM, Cooperatives in the Klang valley run by the Indian community & Indian business associations. Through this program it was felt that the potential of cooperatives and the resources available must be tapped by the community. Also present were representatives of Agro Bank, BSN and Bank Rakyat

Micro Loans Meet the People Session

With the cooperation of Bank Negara, Agro Bank, BSN & Bank Rakayat,, SITF will organize a meet the people session on December 18, 2010 at Perai. We are targeting a minimum of 100 potential borrowers who will attend the briefing and then meet the financial institutions and make an applicat.ion for a micro loan below RM50, 000

SITF has the full support of Bank Negara in undertaking this pilot study and project to really determine the true nature of the problem of access to credit which is the frequent complaint of the community.