Indian Business Dialogue with Banks

Representatives of Business Associations together with Datuk Denison (Taskforce) and Dr Siva (MoF)

The Taskforce facilitated a dialogue on Working Capital Guarantee Scheme (WCGS) with three banks namely CIMB, Maybank, AM Bank and Indian Business Associations. This dialogue was held at PROKHAS office at Damanasara, KL. Also present were representatives from Ministry of Finance, Bank Negara, Taskforce and MIC. The dialogue was held on Friday Jan 28, 2011 at 10am

Participating Indian Business Associations

A total of about 26 people gathered at PROKHAS office including representives from various business associations such as:

• Malaysian Indian Business Association (MIBA)
• Indian Restaurant Association,
• Indian Muslim Restaurants,
• Indian Provision Shops Association,
• Malaysian Indian Contractors Association
• Malaysian Indian Van & Bus owners association
• Malaysian Indian Hairdressers Association

These are among the tradition Indian business in the country. They are operated by individuals and families and many have emerged as very successful small businesses. A frequent complaint among a majority of them is the difficulty to access bank loans for start up or even expansion. This direct dialogue in the presence of PROKHAS, MoF and Bank Negara is to ensure access and inclusion.

Participating Banks

Dato Kamal Mohd Ali who is the GM of PROKHAS gave the opening welcome speech, followed by introductory speeches by Datuk Dr Denison Jayasooria and Dato Jaspal Singh (Treasurer of MIC). This was followed by a briefing by the bank representatives namely

• Puan Eliza Dato Abdul Aziz (CIMB)
• Ms Alice Wong (Maybank)
• Ms Kholilah Aziz (Maybank)
• Ms Karen Foo (AmBank)

Key Points from Banks presentations

There were a number of recurring themes based on the presentations by the three banks which can be noted as common points emphasized by them. These are listed below:-

First, contrary to popular perception, banks do not discriminate anyone on the basis of ethnicity or race background giving preference to one community as opposed to another.

Second, all the three banks emphasized the following key indicators namely

• Viability of the business
• Audited accounts
• Sources of repayment of the loans
• Repayment track record
• financial management

Third, the banks indicated that they are pro business and want to reduce their risk of default and therefore although in the WCGS the bank risk is only 30%, the banks still want the potential borrowers to be low risk or have the ability to share the risk

Fourth, all three banks indicated that application process and requirements are pretty standard even in the case of WCGS using their check list of priority items. Some aspects emphasized by the banks during the dialogue are:-

• Legal registration as Sdn Bhd
• Statutory documents
• Audited accounts
• Business profile
• Trade credibility
• Collateral requirement - Not required in WCGS case as Government is guaranteeing 70% but cash asserts & deposit namely business needs to come up with the 30% portion)

Fifth, all three banks said they are happy to work with the Business Associations in financial product promotion and briefing of the scheme in order to ensure access and inclusion. In addition Maybank indicated that their small and micro business development centre would be available to assist in business training and development.

Indian Business Association Response

The business associations present agreed to the following:-

• Establish a business network and strengthen cooperation in order to promote, educate, advice and monitor access to loans

• The associations set a target of identifying 300 potential and good borrowers to participate in the WCGS scheme in order to ensure that Indian businesses secure 50% of the RM1.5billion allocation by the Federal government

• Organise with the support of the Taskforce  a briefing and awareness on WCGS with speakers from PROKHAS, CIMB, MayBank, AmBank and AKPK

• The Associations collectively fixed March 4, 2011 (Friday) afternoon for this workshop at Dewan Somasundram (Menara Tun Sambanthan, KL). Registration from 2pm and the session starts at 3pm.

• The Associations agreed to collectively invite about 200 of their members to participate in this workshop.

• Taskforce will coordinate this program by confirmation of venue, hosting the refreshments and invitations to banks and agencies including MoF, Bank Negara, PROKHAS, AKPK, CIMB, MayBank & AmBank.