KUALA LUMPUR Jan 17 Malaysia's central bank
plans to launch a new reference rate framework for lenders to
price retail loans to ensure monetary policy is more effective
and reflects market conditions.
Lenders, including Maybank, CIMB and
Public Bank, have been pricing consumer loans at a
substantial discount to the current base lending rate to attract
customers and boost loan growth.
This is especially the case for housing loans where lenders
have offered 1-2.35 percentage point discounts to the current
6.6 percent base lending rate (BLR) for the first few years of
"The proposed basis for setting reference rates will
eliminate negative spreads to the reference rate," the central
bank said in a statement late on Thursday.
"Future changes to the reference rate will directly reflect
changes to a financial institution's funding costs due
specifically to monetary policy changes, regulatory changes and
market funding conditions," it added.
Bank Negara said under the proposed framework, the new
reference rate will be set by financial institution's funding
structure, strategies and statutory reserve requirements that
will boost transparency.
Other pricing components such as borrower credit risk,
liquidity risk premiums, operating costs and profit margins will
be included in the spread to the reference rate, the central
Bank Negara said lenders have been set a Feb. 14 deadline
to give feedback on the proposal.
(Reporting by Niluksi Koswanage; Editing by Jacqueline Wong)