Who has tried to get an overdraft facility from a local bank only to be told to place a fixed deposit of similar amount with the bank?

How often have we heard of stories of small time entrepreneurs who needed bank loans to help their businesses only to be turned away because they do not have strong collaterals?

Has anyone who has a business idea but no capital tried approaching our local banks for a start-up loan only to be turned away for having no past track record?

The above are common knowledge among laymen Malaysians. Not to our political leaders though because they are never interested in our welfare and neither are they in touch with reality on the ground. And do not be fooled into believing that only non-bumiputras are faced with the above problems. The available government schemes are not that easily disbursed even to the bumiputra entrepreneurs. Not connected kot...

Malaysian banks are rubbish. From the ridiculously stupid requirement of requiring an introducer to open an account (what the hell for, seriously) to their level of service to the very objective of running a bank.

What are the main objectives of a bank? I will say to accept deposits, and to lend those deposits out for a gain via charging interests.

Are our banks meeting these objectives? Very partially. Accepting deposits - yes. Disbursing loans - no. But yet they are making vulgar profits. Huh?

Our local banks are no longer interested in making money from interests on loan. That's too risky as the loans may go bad. Over a business lunch recently, I took the opportunity to whack a couple of bankers that their bank should cease their operations and look for a new business if they are no longer interested in giving out business loans. (No I was not asking them for a loan). They are simply being overly cautious with their credit assessment. And those 2 idiot bankers had the cheek to ask me how I would feel if I am the one being asked to lend money out. For heaven's sake, I am not in the business of lending money - you are, jackass!

The truth is our banks have no clue what credit assessment is all about. Credit assessment is a difficult task as it requires the assessor to be somewhat of a Nostradamus. But poor skills and lack of capabilities have resulted in lazy approaches to be adopted based on 'policies' created by 'upper management'. It would seem that anybody can do credit application assessment nowadays. Forms have been created. If you meet enough ticks, you get your loan. The bad news is there are no 2 businesses that are the same. 1 simple form is not going to be able to cater for a 'living' entity like a business. How good are these jokers sitting behind the computers in interpreting the profit and cash flow forecasts and projections presented by businesses to the banks? How sound is their understanding of the hundreds of industries out there? Too much effort involved, too much skills required.

Fortunately for our banks, and unfortunately for us, they found a new source of income - service charges. Malaysians are complaining that banks are charging for everything but Bank Negara will not give a damn. After all, they want to keep the banks afloat.

Malaysians are charged like no tomorrow just to use their own money. Your bank charges start the moment you open a savings or current account - admin fee, search fee. Then you get charged an annual fee. Further fees will be charged if you don't maintain a minimum amount. Why? It's my money, why can't I spend it? Farking hell, you even get charged if your account is dormant. If you withdraw money from an ATM of another bank, you get charged RM1. And RM1.50 for internet banking fund transfer. Hello! Didn't I just save you some human effort for going techie? Why RM1.50 per transaction? And a hell lot of other transactions downright to the moment you close your god damn account. Click on any bank's website and look at their long list of service charges.

I really cannot begin to estimate how much our banks make every year from stealing this money from us. Yes, stealing. It is blardie legalised daylight robbery. But what I am sure is that this service charging is a multi-billion ringgit industry. Mind you, corporate accounts get charged much more than individuals. Multi-billion bucks of free income.

The Star reported on 16 October 2009 in the article titled "Public Bank Posts Higher Q3 Net Profit" that:

1. For the 9 months ended 30 September 2009, Public Bank made a net profit of RM1.84 billion
2. Other operating income increased by 10% to RM1.03 billion

What does the above tell you? More than 50% of Public Bank's profit came from non-core business. If that is the case, shouldn't the non-core business of the bank now be called it's core business? After all, Public Bank is no longer earning the bulk of its income from its lending activities.

And I am curious as to how much of this RM1.05 billion is earned from charging service charges.

Something is just not right with the way Malaysian banks are running their business. Consumers cannot be ripped off per the banks' wishes.

Banks have a social responsibility too. That is to move money around the economy. Giving out loans is one important aspect. I understand that giving out loans is risky business. The country's loan system was so poor pre the Asian Financial Crisis that the banks were hard hit. And oh don't we all know of the current Credit Crisis. But understand that these are the results of greedy and unscrupulous banking decisions. In both crises, money was given out like a running tap. There was pretty little credit assessment. And now we have the opposite.

There has to be prudent and sensible credit assessment and not form ticking like what we have now. Seriously, if banks are not willing to put in the effort to earn interest income and yet be able to balance the risks of lending, don't run a bank.

Money has to be earned. If it has to be earned the hard way, then so be it. Our banks are living on free for taking money via imposing never ending service charges. Go back to your core objectives of money lending. If the risks are too much to stomach, then I suggest that the banks look into other lines of businesses. There will be some others who are willing to earn money the hard way.

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