We have evidence that information about their clients and customers were divulged by these Banks and Financial Institutions to third and even fourth parties and the collusion of EPF and Telekoms in this criminal acts.
In Malaysians what ever laws, rules, regulations, checks and balances put in place in any corporation, in any statutory body, in any government entity, there will be a provision that allows the relevant Minister to overrule these enactments so that the Minister can come in as a referee in the last resort and resolve the situation.
The inherent flaw of this provision is the presumption that a Minister will make a decision in the best interest of the organization! UMNO and Barisan Nasional Ministers are most likely to err on the side of their vested self interest rather then ours when it comes to decision making!
This is about a trust betrayed. The trust we place in Najib as Minister of Finance and the betrayal of that trust for political and financial expedience and gain. What I will now do is to tell you how Najib Tun Razak, our Minister of Finance betrayed our trust by the decisions he made pertaining to Non Performing Loans’s of our Banks.
Let us start from the beginning:
Banking and Financial Institutions in Malaysia are governed by BAFIA : The Banking and Financial Institution Act which regulates what they can and cannot do.
Under the Banking and Financial Institution Act of 1989, Malaysian Financial institutions are not permitted to dispose of any of their assets, including NPLs, without an application to and approval from the Minster of Finance.
In 1997 lending by Banks in Malaysia in three sectors accounted for 45% of the Banks total lending.
· Property : 20% of lending.
· Consumption credit: 33% of lending.
· Purchase of securities: 10% of lending.
At the onset of the Global Financial Crisis, the value of Non Performing Loans (NPL) was 15 billion ringgits. By December 1998, NPL had quadrupled to 60.5 billion ringgits.
NPL : “A loan is nonperforming when payments of interest and principal are past due by 90 days or more, or at least 90 days of interest payments have been capitalized, refinanced or delayed by agreement, or payments are less than 90 days overdue, but there are other good reasons to doubt that payments will be made in full”
These loans were for mostly for the purchase of homes, cars and for credit cards for consumers consumption. These NPL meant that people in Malaysia were unable to pay for their homes, their cars and household debts increased because of the loss of income and credit during the GFC.
What happens when you default on your loan?
- The bank issue letters of demand.
- If you do not pay the bank will summon you to court for 1st mention to ask you whether you admit to the debt claimed by the bank.
- If you admit, a consent judgement is entered whereby you then renegotiate with your bank to settle the debt.
- If you still do not pay the bank shall apply to seize your assets and properties.
- Bank's debt collectors and agencies have no right to threaten and beat you up.
- Your EPF, Pension, SOCSO and Insurance money cannot be seized.
How do Banks deal with NPL’s when they cannot collect the outstanding debt from the borrowers?
Banks can sell these NPL’s to companies willing to purchase these non performing loans (NPL) and earn profits using specific strategy to do so. Usually property is the real value for purchasing non performing debt. In non-assets NPL’s the debt often relates to credit cards or personal loans used for immediate consumption items. Attempting to purchase this debt for $.10 or $.20 on the ringgit can be profitable if the company settles for $.30 or $.40 on the ringgit with borrowers.
However under the Banking and Financial Institution Act of 1989, Malaysian Financial institutions are not permitted to dispose of any of their assets, including NPLs, without an application to and approval from the Minster of Finance.
This did not stop Local and Foreign banks from selling their NPLs to debt collection agencies.
Debt Collection became a lucrative business and like all things Malaysian, ‘good business opportunities’ has its own attractions to the rich, the powerful and the politically connected. Collusion between those in the Banks, Debt Collection Agencies and Politicians fed of each other. Thugs and gangsters become the enforcement arm necessary to ensure the collection of these debts and as they say, in every cloud there is a silver lining. In the misery of those who were in debts these agencies thrived.
In 2009 the Minister of Finance, Najib Tun Razak, issued the following letter:
The letter gives 'blanket approval' to the Banks to sell their NPL's subject to the banks following "Guidelines on the Disposal/Purchase of Non-Performing Loans by Banking Institutions (NPL Guidelines)"
Now here is the thing: The Malaysian Courts have accepted the blanket approval and upheld the vesting orders i.e. according to the court its legal. Section 50 of Bafia also bulletproofs the vesting order!
Read more at: http://steadyaku-steadyaku-husseinhamid.blogspot.com.au/2012/06/najib-tun-razak-trust-betrayed.html