Response to The Edge article entitled "IBs want property lending rule scrapped"Ref No : 04 Oct 2017 Embargo : For immediate release
This is with reference to the article published in The Edge dated 2 October 2017 entitled “IBs want property lending rule scrapped”. Investment banks in demanding for this guideline to be “scrapped” are taking a short term view and should consider the long term systemic implications of an over-exposure to the property sector and not narrowly focus on their own commercial gains. We should not be oblivious to the many lessons learnt from the Asian and Global Financial Crisis.
The Broad Property Sector (BPS) guideline was introduced in 1997 to avoid over-concentration of credit exposures to the property sector. The guideline therefore is still relevant in curbing excessive systemic exposures to the sector, complementing other existing regulations.
Banking institutions should always be mindful of current property market conditions and not contribute to a situation where there is a mismatch between supply and demand. There is currently an insufficient supply of affordable homes. This situation could worsen if these supply-demand conditions persist. Banks and property developers should focus on supporting the affordable housing segment and development projects that generate multiplier effects to the economy.
Bank Negara Malaysia
04 Oct 2017
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