EXCESSIVE LENDING CONTAINED: Loan growth has dropped to 9pc from 12pc - 13pc, says Zeti
BANK Negara Malaysia says the household debt level in the country has not reached an alarming level and excessive lending activities have been contained.
"We have seen loan growth drop to a more sustainable nine per cent from 12 to 13 per cent," said its governor Tan Sri Dr Zeti Akhtar Aziz.
She said the non-performing loans for the household sector, which are at less than two per cent, show that those who have borrowed are creditworthy.
As of March this year, the ratio of household debt to gross domestic product grew by 13 per cent to 83 per cent from 70 per cent in 2009, the highest level for developing countries in Asia.
"In Malaysia, we have the Central Credit Reference Information System that monitors the exposure of individuals and businesses, all the way to conglomerates," she said at a media briefing on the sidelines of the two-day Fifth AFI Policy Global Forum, which began yesterday.
"Through this, we have seen bad debts or impaired loans from the household and other sectors, including small and medium enterprises, go on a declining trend. Therefore, no, we aren't concerned.
"We have taken all the necessary measures - macro-prudential measures - to rein in excessive lending activities to specific sectors in particular. We believe, at this point, it is contained."
Asked about the tone of the monetary policy which does not include the term normalisation as it has in the past, Zeti explained that normalisation is a process.
"In a dynamic environment, the risks change. We have highlighted in our recent monetary policy statement the direction of the risks and we continue to monitor these risks.
"Each time, we will balance these risks and make a decision as to the direction of the monetary policy."
For a small and highly open economy such as Malaysia, it has to monitor conditions and make assessments of future risks relating to inflation and growth so that the central bank can be "anticipatory" in its policy.