Development Financial Institutions' Higher Approval Boosts Over 14,000 Businesses

KUALA LUMPUR, March 24 (Bernama) -- More than 14,000 small and medium enterprises (SMEs), microenterprises, start-ups, and the low-income group grew in line with higher approval rates under development financial institutions (DFI) financing in 2024, said Bank Negara Malaysia (BNM) today. 

In its Annual Report 2024 released today, the central bank said outstanding DFI financing grew by 5.6 per cent in 2024 to RM183.3 billion, supporting more than three million SMEs, microenterprises, start-ups. and the low-income group vesus the 6 per cent growth in 2023 to RM173.5 billion.

 "The financing yielded positive impacts, creating and sustaining employment for more than 130,000 individuals," it added. 

BNM said these achievements were enabled by the Performance Measurement Framework (PMF), which guides DFIs to develop intentional strategies that create additionalities via their business activities to add value to the financial system and the broader economy. 

In 2024, the PMF working group was established to advance the rollout of the PMF across DFIs. 

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"As a collaborative platform, it facilitates open dialogue among stakeholders to discuss challenges relating to PMF implementation, promotes the sharing of effective strategies and integrates technological advancements to streamline data collection processes," BNM said

Enhancing Continuous Access to Financing 

In 2024, BNM said credit conditions remained supportive of businesses’ financing needs which grew by 5.1 per cent compared to 3.7 per cent in 2023. 

Of this, outstanding small and medium enteprise (SME) financing growth continued to remain strong at 8.1 per cent against 8.7 per cent in the previous year, supported by continued disbursements mainly for working capital purposes. 

The central bank said new SME financing approvals grew in 2024 amid a higher approval rate of 81.5 per cent versus 80.9 per cent in 2023, particularly for the construction sector. 

BNM’s Fund for SMEs, which accounted for 8.0 per cent of outstanding financing to SMEs, complemented financing from banks and DFIs. 

As at end-2024, about RM5 billion remained available for utilisation. 

"The current focus is to channel funds into areas aligned with national economic and development priorities, including accelerating digital transformation and the greening of SMEs," BNM said. 

Promoting inclusive Financial Protection Offerings 

In 2024, 45.5 per cent of Malaysians had at least one life insurance or family takaful policy, an increase from pre-pandemic levels of 41.5 per cent in 2019. 

BNM said life insurance and family takaful policies typically saw a higher uptake in urban areas like Kuala Lumpur and Penang, in tandem with greater awareness on the importance of protection.

Throughout 2024, there were over 530,000 subscriptions of microinsurance and microtakaful products under the Perlindungan Tenang (PT) framework. 

Since the launch of the revised PT policy document and the implementation of the PT voucher programme in 2021, cumulative PT take-up grew significantly and currently stands at 4.9 million subscriptions. 

"This is roughly 49 times the take-up rate since the launch of the PT framework in 2017 up to 2021," BNM said.

Claims totalling RM17 million were paid out in 2024, a 20 per cent rise against 2023. These payouts were against unexpected and adverse life events like deaths, personal accidents and critical illnesses.

Moving Forward

BNM said it will remain steadfast promoting a progressive and inclusive financial system in 2025 with efforts to concentrate on initiatives to advance the objectives within the Financial Sector Blueprint 2022–2026 until the desired outcomes are achieved.

It noted that the central bank had a mid-term review in 2024 to evaluate the progress of current blueprint strategies and identify necessary adjustments, including accelerating support for orderly transition to a greener economy. 

"Alongside the blueprint strategies, our financial inclusion initiatives will be guided by the vision and strategies laid out in the Financial Inclusion Framework (2023–26)," it added.

The central bank said efforts were underway to enhance financial literacy strategies. 

-- BERNAMA