Bank Negara Malaysia announced today that with immediate effect banking institutions are not allowed to finance the development of residential properties and shophouses where the individual unit costs more than RM250,000 each. In addition, banking institutions are not allowed to provide financing to develop hotels, resorts, office buildings, golf courses, clubs and shopping complexes. This prohibition is applicable under the following circumstances :-

1. Where applications for credit facilities to finance the development of properties costing above RM250,000 have yet to be approved; and
2. Where approval has already been given, banking institutions are only permitted to disburse loans to complete the current phase of development subject to project viability. For subsequent phases, banking institutions are only allowed to finance the construction of properties costing RM250,000 and below.

Banking institutions are allowed to continue to extend credit facilities to finance the purchase of land for the development of properties costing RM250,000 and below. However, bridging finance can only be provided to develop the phase which has been approved for development. Banking institutions can also continue to provide financing to end-buyers for the purchase of properties which have been fully completed. In the case of residential properties, normal end-financing for properties under construction can also be extended.

This guideline was introduced to limit the construction of properties costing above RM250,000 in view of the need to clear the current backlog of such properties. Bank Negara Malaysia will review this guideline from time to time.