Current environment calls for property lending rule: Miba

PETALING JAYA: The Malaysian Investment Banking Association (Miba) on Friday said it is not for the broad property sector (BPS) guideline on property lending to be scrapped, explaining that the current property environment calls for the continued practice of prudent measures introduced in the guideline on lending to BPS in 1997.

The statement comes after Bank Negara Malaysia (BNM) called on investment banks (IBs) to not take a short-term view in their desire to scrap the 20-year rule, on
Oct 4.

“Miba and its members are cognizant of the ramifications resulting from the over-concentration of credit exposures to the property sector and the need to maintain prudential measures to keep systemic risks in check,” it said.

“The guideline on lending to the BPS’, which was introduced in 1997 has encouraged prudential lending and ensured there is no property overhang. The current property environment calls for the continued practice of prudent measures and necessary safeguards to be put in place.”

Miba went to say that the guideline on lending to the BPS cannot be read in isolation as it complements other banking regulations within the financial system.

Miba said it plays a key role in supporting and contributing actively towards the development and growth of the investment banking industry and maintain close consultation and collaboration with BNM on all industry matters to ensure the stability and sustainability of the financial system.