Bank Negara refutes UNDP report, says figures "partial"

KUALA LUMPUR: Bank Negara Malaysia (BNM) has dismissed a recent report sponsored by the United Nations Development Programme (UNDP) and the Economic Planning Unit, which found that a majority of Malaysians have no financial assets and no banking or financial account of any kind, saying it did not take into account the country's shadow banking system, Governor Tan Sri Dr Zeti Akhtar Aziz said.
Shadow banking is a term for the collection of non-bank financial intermediaries that provide services similar to traditional commercial banks.
She said that the shadow banking system includes 900 credit cooperatives and "thousands" of other cooperatives.
"In Malaysia, savings are not only kept in merchant banks and BSN (Bank Simpanan Nasional). We also have non-bank financial institutions, cooperatives, Lembaga Tabung Haji (Pilgrimage Fund Board), unit trust funds and I don't think it (report) takes all these shadow banking (into account). Their figures are partial," Zeti told members of the media at a workshop organised by the central bank yesterday.
She added that central bank data shows that over 90% of the Malaysian population has some form of savings and banking account.
"Of course, in these recent few years there has been dissaving (negative savings), as prices (have gone up), so the cost of living has increased and people are using their savings," Zeti said.
She said non-bank institutions like cooperatives are also regulated by the central bank, although not in the same way that it regulates the merchant banks.
"Furthermore with these other entities lending money for personal use, people are borrowing to buy house. They have an asset," Zeti said.
Citing figures from the Household Income Survey, the Malaysia Human Development Report 2013 noted that nearly 90% and 86% of the rural and urban households, respectively, had no savings, while the majority of households at 88% had zero earnings from their savings.
It said one in three Malaysians also had no banking or financial account, while among the bottom 40%, the figure was much higher, at 50%.
Rural households have the highest number of those without any financial assets (63%), compared with 45% of urban households, and by ethnic group, Bumiputera and Malays chalked up the highest figures as those without such assets. With no immediate liquid financial assets, they are vulnerable in the event of an income or employment shock.
The report also did not take into account forced savings like the Employees Provident Fund.