DUNGUN: The Government is considering setting up a task force to study how to help those blacklisted because they had stood as guarantors for borrowers who defaulted on payments.
The biggest problem for these guarantors is difficulty in securing loans, said Deputy Finance Minister Datuk Donald Lim Siang Chai.
Currently, the guarantors are jointly blacklisted with the principal borrower in the Central Credit Reference Information System (CCRIS).
“We have to revise the whole system so that these guarantors are not unfairly punished.
“Other countries in this region have reviewed their approach in managing loan defaulters, and it is time for us to do the same,” Lim said after attending a Hungry Ghost Festival organised by the Yu Lan Association here on Wednesday.
Financial institutions often rejected loan applications from those blacklisted as guarantors even if the amount was minimal. Bank Negara has taken several steps to protect the guarantors.
It was previously reported that the number of bankruptcy cases nationwide had risen from 70,009 in 1999 to 106,000 in 2003, with the figure recently soaring to 160,000 – many of them having stood as guarantors for others.
Lim said financial institutions found it easier to go after the guarantors instead of trying to locate the principal borrowers.
“This we feel is unfair; the guarantors who were blacklisted are denied any form of hire-purchase loans,” he said.
Lim added that the growth of small and medium industries was hampered because of the difficulty faced by some business owners, who had stood as guarantors for defaulters, in securing loans from financial institutions.
He said he had instructed his officers to re-evaluate the CCRIS system to check whether the system was updated regularly.
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