The issue of Malaysia debt recovery is rooted in the worldwide problem of Non-Performing Loans (NPLs). As with virtually every country, banks in Malaysia are at risk from huge debts arising from outstanding loans. These debts can take the form of unpaid credit card bills, personal loans, and housing loans or mortgages. Just how massive this predicament can potentially become was evidenced when the US sub-prime mortgage affair rapidly spiraled out of control to become a global financial crisis.
NPLs dramatically affect the banks' bottom lines, their profits. They are bad for the national bank, Bank Negara Malaysia (BNM) as they show it is not properly managing how banks do business. High levels of NPLs are also bad for the government because of the bad debt ratio.
Malaysian banks have also gone unchallenged in another serious breach of the BAFIA rules regarding selling NPLs to agencies which are foreign-owned. Despite stipulations from BAFIA that banks may only sell to locally incorporated companies, the Malay Mail has identified many foreign-controlled agencies used by Malaysian banks . These transgressions have also gone unpunished.
Several Malaysian NGOs have condemned the heavy-handed actions used by debt collection agencies. Some are accused of using threats to recover bank loans. Agents employed by the banks are often ex-police officers (with all the implications of corruption entailed), or uneducated muscle-men. Resorting to rough tactics can be no real surprise when these agents work on a commission basis.
Malaysian banks have also disregarded BAFIA rules by selling NPLs to foreign-owned agencies. The Malay Mail has published the names and shareholders of many collection companies that do not comply with BAFIA conditions that banks can only sell to locally incorporated companies. The government have not intervened.
One particular bank who's agents have been accused of excesses is the ICICI bank. In a widely reported example, these abuses led to the death of a debtor. His mobile phone showed one hundred and twenty SMS messages from the agency.
According to the Malay Mail, this collaboration between government and big business has allowed non-resident owned companies to hemorrhage sixty billion Ringgit out of the local economy since 2005. This has been dubbed "Vulture Economics". Malaysia debt recovery became lucrative, attracting the wealthy, powerful and politically-connected as the agents thrive on other peoples money troubles. When seeking a reputable firm, make sure you do your research and understand the way they operate.
NPLs dramatically affect the banks' bottom lines, their profits. They are bad for the national bank, Bank Negara Malaysia (BNM) as they show it is not properly managing how banks do business. High levels of NPLs are also bad for the government because of the bad debt ratio.
Malaysian banks have also gone unchallenged in another serious breach of the BAFIA rules regarding selling NPLs to agencies which are foreign-owned. Despite stipulations from BAFIA that banks may only sell to locally incorporated companies, the Malay Mail has identified many foreign-controlled agencies used by Malaysian banks . These transgressions have also gone unpunished.
Several Malaysian NGOs have condemned the heavy-handed actions used by debt collection agencies. Some are accused of using threats to recover bank loans. Agents employed by the banks are often ex-police officers (with all the implications of corruption entailed), or uneducated muscle-men. Resorting to rough tactics can be no real surprise when these agents work on a commission basis.
Malaysian banks have also disregarded BAFIA rules by selling NPLs to foreign-owned agencies. The Malay Mail has published the names and shareholders of many collection companies that do not comply with BAFIA conditions that banks can only sell to locally incorporated companies. The government have not intervened.
One particular bank who's agents have been accused of excesses is the ICICI bank. In a widely reported example, these abuses led to the death of a debtor. His mobile phone showed one hundred and twenty SMS messages from the agency.
According to the Malay Mail, this collaboration between government and big business has allowed non-resident owned companies to hemorrhage sixty billion Ringgit out of the local economy since 2005. This has been dubbed "Vulture Economics". Malaysia debt recovery became lucrative, attracting the wealthy, powerful and politically-connected as the agents thrive on other peoples money troubles. When seeking a reputable firm, make sure you do your research and understand the way they operate.
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