Efficient, effective intermediation of funds

IN 2011, the financial sector continued to perform its intermediation function smoothly to meet the diverse needs of the economy.

Total outstanding banking sector financing increased by 13.6% to Rm1,003.5bil as at end-2011. In particular, funds continued to be directed to support the small and medium enterprise (SME) sector as an important driver of economic growth, with SME financing growing by 17.1% to Rm165.4bil as at end-2011.

More importantly, financial sector support for SMES has had a significant impact on improving the prospects for success among SMES. In 2011 alone, more than 700 SME accounts with a combined financing value of Rm4.5bil were upgraded to become large enterprise accounts.

Firms in new growth areas and innovative industries also continued to draw support from the financial sector to meet their financing needs.

Comprehensive strategies have been taken to strengthen the resilience of financial institutions, develop the bond market as an important source of funding for the corporate sector, and improve the infrastructure to support financial intermediation.

Building on these foundations, initiatives in 2011 focused on developing the capacity and enabling environment for the financial sector to provide financial solutions that will meet the economic and demographic imperatives of the new economy.

Access to financing for SMES has also been made significantly more efficient with efforts taken by eight banks to simplify processes and procedures for SME loan applications under the PARTNER initiative launched by the Association of Banks in Malaysia in November 2010.

A key improvement under the initiative has been the standardisation of loan application documents to facilitate a more efficient SME loan application process. This also expedites the credit evaluation of loan applications from SMES.