CIMB Group, Malaysia's second largest
financial services provider, is working on a plan to roll out non-collateralised
products for the consumer finance market, bankers familiar with the
matter said yesterday.
Business Times was told that Bumiputra-Commerce Holdings Bhd (BCHB),
the listed holding company of CIMB group, has been working on the
plan for the last six months, conducting field studies, research
and data collection on the implications of providing mass scale non-collateralised
loans to the medium- and lower-end markets.
Currently, banks provide non-collateralised loans of up to RM150,000
in the form of , but these are mainly given out to
higher-end income earners, whose credit risks are much thinner.
A senior BCHB official, speaking on condition of anonymity, said
the plan dubbed as "Express Money" is still being studied
and a decision has yet to be made on its implementation.
The plan is modelled after the GE Money concept, which has gained
a strong following in Japan, China, the Philippines, South Korea,
Singapore, Taiwan, Thailand and India.
GE Money, also known as GE Consumer Finance, is the corporate finance
arm of General Electric Co.
GE Money started by providing unsecured loans before expanding into
other consumer-related areas such , credit cards and motor
vehicle loans via partnership with market leaders of the respective
industries.
In Asia, unsecured loans are fast finding a following as consumers
prefer borrowed cash to credit cards as interest rates on these loans
average 8-12 per cent, less than the 18-22 per cent charged on outstanding
credit card balances.
In Malaysia, the rates on credit card balances are about 18 per
cent, while normal lending rates are in the range of 8 per cent,
providing a wide enough gap for CIMB Bank to capitalise on consumers
currently not eligible for personal loans.
The plan calls for the setting up of a separate unit to oversee
the distribution of the loans, followed by offering unsecured loans
with a maximum cap of RM10,000 to the middle-income and lower-end
wage earners based on a 15 per cent-a- year interest rate.
It plans to keep default rates, a potential land mine since the
loans are uncollateralised, at below 3 per cent with rigorous spot
checks based on computerised credit data supplied by credit bureaus
Sources
http://www.btimes.com
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