I refer to the comment by Abdul Hamidy Hafiz, chairperson of the Corporate Debt Restructuring Committee CDRC on the revised guidelines for restructuring of corporate loans where he said that many banks may now take it upon themselves to restructure the loans on their own, using CDRC's loan restructuring principles and guidelines.

He further added that initiatives have been put in place to ensure that all avenues are made available to assist viable corporations to restructure their debt obligations.

The Malaysian Indian Business Association (Miba) would like to submit this recommendation to the governor of Bank Negara Dr Zeti Akhtar Aziz and also reiterate that not all banks resort to such healthy fair play practices as designed by the CDRC and more so when it comes to medium- size businesses and enterprises.

Some banks take the fast-track approach to auction the property of loan defaulters. They do not believe in negotiating with the borrower and resort to psychological harassment to the extent that the borrower is forced to accept the auction process.

Members believe this is more so when it comes to prime property collateral where the banks may discreetly work hand-in-hand with certain syndicates to go for foreclosure. It’s an open secret which is difficult to prove. It is sad to see auction shows which are almost like a fiesta celebration with food and refreshments for a select few while the borrowers may be bleeding from their hearts.

Amazingly, when restructuring negotiations are in process, interest rates are increased exorbitantly thus stifling the recovery process willfully. We have members who have complained where the interest has accumulated to almost the principal sum.

To add fuel to the fire, this figure is further increased with the additional auction fees, postage fees, valuation report fees and so forth. Miba strongly recommends that the Bank Negara governor strictly enforce the regulations of the CDRC to protect the unfortunate investors.

With our local and foreign investments falling short by almost by RM30 billion for the year 2009, Bank Negara must be more vigilant to ensure local investors, business people and entrepreneurs are not rattled by some unscrupulous banks who threaten investors on non-performing loans.

If borrowers show genuine interest to service their loans in some form or another, the banks must give options and exhaust all other avenues before going for foreclosure. The matter must be referred to the CDRC and only when it is realised that salvaging the business is impossible, then only should the banks go for foreclosure.

Bank Negara should ask all banks to report on all foreclosures to ensure that all measures have been taken to ensure that the economic environment of the country is maintained especially at a time when the whole world is feeling the crunch of the economic depression.

The writer is president, Malaysian Indian Business Association (Miba).