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In uncommon open letter, BNM governor dispels OPR hike-bankruptcy rise notion

KUALA LUMPUR (July 15): In a uncommon open letter to editors on Friday (July 15), Financial institution Negara Malaysia (BNM) governor Tan Sri Nor Shamsiah Mohd Yunus dispelled the alleged hyperlink between Malaysia’s In a single day Coverage Fee (OPR) hike and the rise in particular person bankruptcies within the nation, saying that the variety of particular person bankruptcies within the nation has been declining since 2016.

“Letter to editors: Declining chapter case development; chapter motion is the final resort for monetary institiutions,” Nor Shamsiah mentioned.

Nor Shamsiah mentioned chapter motion is the final resort for monetary establishments in any case different loan-repayment restoration efforts are made to recuperate the cash loaned to the borrower.

“To declare somebody bankrupt isn’t a simple factor,” she mentioned.

BNM’s Financial Coverage Committee (MPC) through the MPC’s two newest conferences raised the OPR by 25 foundation factors (bps) every to convey the present OPR to 2.25%.

On July 6, 2022, BNM mentioned its MPC determined to extend the OPR by 25 bps to 2.25% because the unprecedented Covid-19-driven circumstances that necessitated a traditionally low OPR continued to recede.

On Might 11, 2022, the MPC elevated the OPR by 25 bps to 2% from a file low of 1.75% as world inflationary pressures elevated sharply and after making an allowance for that sustained reopening of the worldwide financial system and enchancment in labour markets continued to assist the restoration of financial exercise from the affect of Covid-19-driven motion restrictions.

The OPR at 1.75% was the bottom on file, in keeping with information relationship again to 2004 on the central financial institution’s web site.

The OPR had been maintained at 1.75% since July 7, 2020, when BNM minimize the speed from 2% following the Covid-19 outbreak that started in early 2020.

Within the open letter, Nor Shamsiah mentioned to declare somebody bankrupt isn’t a simple factor as a result of many procedures should be adhered to by monetary establishments or different collectors.

In accordance with her, the opposite collectors embrace non-bank cash lenders and items suppliers.

She mentioned the variety of particular person bankruptcies in Malaysia has been declining since 2016 primarily based on updates from chosen banks and non-bank establishments.

“These embrace the interval when the OPR was rising in 2018,” she mentioned.

Nor Shamsiah didn’t specify the names of the seven home monetary insitutions, from which the variety of particular person bankruptcies in Malaysia was derived from.

She, nonetheless, mentioned these seven home monetary insitutions account for 71% of Malaysia’s banking-system loans.

Nor Shamsiah’s open letter features a desk, which confirmed the declining variety of particular person bankruptcies in Malaysia since 2018 when the determine stood at 5,283 people.

In 2019 and 2020, the figures stood at 3,948 and a pair of,844 respectively earlier than falling additional to 1,884 in 2021, in keeping with her.

Between January and April 2022, the variety of particular person bankruptcies in Malaysia stood at 515, she mentioned.

Nor Shamsiah’s open letter was in response to allegations by non-government organisation Persatuan Penyelesaian Pengguna dan Peminjam Malaysia, which is claimed to have linked the OPR’s rise to Malaysia’s chapter development.

“Lately, there’s a group (Persatuan Penyelesaian Pengguna dan Peminjam Malaysia) [which] linked the OPR’s rise to the chapter development,” she mentioned.

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