Property developer lending could be risky, says Fitch

 |Sep 15, 2016
The lending property developers will not be subject to Bank Negara Malaysia (BNM) monitoring in terms of risk management and underwriting standards imposed on banks.
The lending property developers will not be subject to Bank Negara Malaysia (BNM) monitoring in terms of risk management and underwriting standards imposed on banks.

A minister’s proposal to grant lending license to property developers could add risks linked to rising household debt warns Fitch Ratings.

If it’s allowed lending to households will be unregulated with weak financial profiles and could undermine financial system strength if not implemented prudently.

The lending property developers will not be subject to Bank Negara Malaysia (BNM) monitoring in terms of risk management and underwriting standards imposed on banks.

Urban Wellbeing, Housing and Local Government Minister Tan Sri Noh Omar said that eligible housing developers could apply for moneylender licence to provide loans to property buyers.

Prior to that deputy prime minister Zahid Hamidi has asked Noh Omar to brief the cabinet on the matter before introducing the scheme.

In 2014, BNM banned the developer interest bearing scheme (DIBS) which allowed homebuyers to put down a small amount upfront and pay the rest upon completion.

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