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BSN To Offer Micro-finance Products By Year-end

KUALA LUMPUR, Aug 8 (Bernama) -- Bank Simpanan Nasional (BSN) expects to offer micro-finance products by year-end, its chairman Datuk Azim Mohd Zabidi said.

"Currently, we are working closely with Bank Negara Malaysia to roll out this product as soon as possible.

"Hopefully, by the end of this year," he told reporters after the launch of Prudential BSN Takaful Bhd here Tuesday.

Azim said the bank would offer micro-finance products based on commercial basis.

"The interest rate for micro-finance will also be on commercial basis which will be double-digit compared with 4 percent previously.

"This is in line with micro-finance or micro-credit interest rates throughout the world.

"Currently, Peru, Bangladesh, Pakistan and Indonesia are charging double-digit interest rates for micro-financing," he said.

Azim said previously, BSN offered 4 percent interest rate for such a scheme as it was funded and subsidised by the government and it was now not sustainable to continue with it.

"If you want to look at commercial basis, even the credit charges are between 18 to 24 percent annually. Why shouldn't micro-credit be along that sort of interest rate band?" he said.

Azim said to date, the bank's total loan portfolio stood at RM4.4 billion as at June 2006.

He, however, declined to comment on the allocation for the new product.

Prime Minister Datuk Seri Abdullah Ahmad Badawi announced yesterday that the government would transform BSN into a specialised micro-financing institution in line with its plan to develop and enhance small- and medium-scale enterprises.

He said under the comprehensive plan, locally-incorporated foreign banks would also be given consideration to have greater presence in non-urban areas to conduct micro-financing activities.

BSN is expected to introduce a loan package for micro-enterprises in the primary agricultural sector, services sector including information and communications technology, manufacturing including agro-based and manufacturing-related services with a maximum loan of RM50,000 for up to five years.

Micro-enterprises are those employing fewer than five employees with an annual turnover of between RM200,000 and RM250,000.



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Source: Bank Negara Malaysia

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