Bank Negara approves RM2.8bil financing under SME relief facility

KUALA LUMPUR: Malaysia's central bank, Bank Negara Malaysia, has granted approximately RM2.8 billion in financing through its SME Stabilisation Relief Facility (SME SRF). This assistance is targeted at over 4,900 small and medium-sized enterprises (SMEs) impacted by the Middle East conflict. Governor Datuk Seri Abdul Rasheed Ghaffour stated that the facility was implemented to provide working capital support to viable businesses, ensuring their operations continue despite economic disruptions caused by the conflict.

While the primary focus is on short-term stabilization, it is crucial not to overlook long-term resilience, he emphasized.

The RM5 billion SME SRF was launched by Bank Negara on April 28 to aid micro and SMEs affected by the ongoing Middle East conflict. The facility remains open for applications until the end of the year or until the allocation is fully utilized. Abdul Rasheed highlighted the importance of structural improvements in the financing ecosystem to assist SMEs in withstanding future shocks, seizing new opportunities, and growing into domestic leaders.

To facilitate this, Bank Negara introduced a RM10 billion guarantee scheme through the Credit Guarantee Corporation Malaysia Bhd (CGC), aiming to mobilize private sector financing more effectively. This initiative focuses on financial inclusion, climate resilience, productivity, and overall resilience.

Regarding overall financing conditions, Abdul Rasheed noted that they remain supportive. Credit continues to flow to businesses despite external uncertainties. Aggregate credit growth to the private non-financial sector expanded to 6.4 percent (1Q 2026: 5.6 percent), notably among business segment enterprises. Corporate bond issuances increased by 8.1 percent in the second quarter, compared to 5.9 percent in the first quarter, driven by heightened issuances for working capital needs.

Business loan growth also improved to 7.2 percent from 5.7 percent previously, supported by consistent disbursements across various business segments. Household loan growth remained relatively stable at 5.4 percent during the quarter, compared to 5.5 percent in the first quarter.

Abdul Rasheed affirmed that financing conditions for SMEs remained robust, with outstanding SME financing growing by 4.2 percent in the second quarter of 2026. Financing activity is supported by higher approvals, particularly for investment-related purposes. Approval rates have remained consistent as banks continue to meet financing demand across all sectors, with notable activity in agriculture, mining and quarrying, and construction.