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• Banking and Financial Legalese (Terms)
• Buying on Hire Purchase
• Commodities
• Danaharta Act
• Exchange Control Rules
• Offshore Banking
• Securities

CAN A BANK OR FINANCIAL INSTITUTION GRANT CREDIT FACILITIES WITHOUT SECURITY ?

No bank or financial institution shall give to any person any credit facility without security.

However, credit facility may be given without security, where the credit facility given

• in case of banks, finance company and merchant bank, does not exceed an aggregate amount of RM$10,000 which
• a bank or merchant bank may grant to its related corporation or
• a finance company may grant to any person.
• in case of finance company
• at least a portion of that credit facility is guaranteed by the Credit Guarantee Corporation Malaysia Berhad and
• the portion that is not secured by any property or guaranteed by the Credit Guarantee Corporation Malaysia Berhad shall not exceed an aggregate amount of RM$150,000
• in case of finance company, to its borrower
• not exceeding the outstanding amount of the borrower's debt to it by accepting unsecured loan stocks or unsecured debt securities issued by the borrower pursuant to a debt restructuring exercise if the unsecured loan stocks or the unsecured debt securities is for the satisfaction of the borrower's debt.

WHAT CAN BE DEEMED A SECURITY ?

A security in respect of a credit facility shall be of property of a value which is not less than the amount of the credit facility given to a person.

The value of any property which is provided as security shall be

• the market value thereof or
• where for any reason it is not possible to determine the market value thereof, the value approved by the Central Bank of Malaysia on an application by the person taking the security which should set out the value arrived at by the applicant and the basis for it.