Update on 30.3.2022 @ 5:15 pm: At last Bank Negara Malaysia has woken up about the problems that will arise from “Buy Now Pay Later Scheme” (BNPL). It is only now that BNM, SC and MOF are looking into passing new laws to regulate BNPL Scheme. What a joke! It is a case of “closing the stable door after the horse has bolted’. As usual it is better late than never. Thank you BNM for a job well done! See in HERE.

With the advent of various innovations in the financial world, in January 2021 our most competent Minister of Finance, Senator Tengku Zafrul, and/or Bank Negara Malaysia (“BNM”) Governor, Yg Bhg Tan Sri Nor Shamsiah Bini Mohd Yunus, have sought to enter the arena of financial technology by opening up applications for five (5) Digital Banking Licenses in. On 30.6.2021, applications for the so-called digital banking licenses had closed and it has been reported that there were twenty-nine (29) applicants as stated in HERE. 

On 1.7.2021, BigPay Malaysia Sdn Bhd (“BigPay”), an outfit of PN17 AirAsia had applied in lightning speed to BNM for a Digital Banking License as reported, HERE.  Other contenders for the coveted five (5) digital banking licenses include GrabFin, Sunway Group, AEON Credit, Kenanga Bank, Axiata, RHB Bank Berhad and etc. 

On 11.2.2022, The Star had reported BNM Governor YBhg Tan Sri Nor Shamsiah Mohd Yunus had announced that the results of the applications will be announced in March 2022, HERE.

On 3.3.2022, Malaysian Reserve reported that Tan Sri Tony Fernandes, the top executive of AirAsia group of companies which include BigPay Sdn Bhd and BigPay Later Sdn Bhd launched a brand new digital personal loan facilities and that it will be regulated by the Ministry of Housing and Local Government. This is very confusing and its not clear whether this is part of the Digital Banking or not, HERE.

During the said launch, Tan Sri Tony Fernandes had jokingly said: “I know we still owe people money through refunds, but now you can get loans from us.”

I’m sure all of you will find this very funny! It must be noted that many AirAsia customers have not been refunded what they have paid to AirAsia for flight tickets which flights were cancelled not due to the fault of the customers.

Rumour: BigPay May Be One of the Five

Rumour has it that BigPay may be one of the selected five (5) applicants but until this very day, the famous Tengku Zafrul and/or the BNM Governor have not uttered a word about the successful applicants. Lets wait and see as March is coming to an end soon!

Let us not forget that the apex authorities for all financial activities in Malaysia, namely BNM and the Minister of Finance are responsible to ensure that members of the public are adequately protected from the possible negative impacts of these so-called new innovations proposed by the smart alecs! 

Buy Now Pay Later Scheme

Although no proper announcement had been made by both Tengku Zafrul, the Minister of Finance and a good friend of Tan Sri Tony Fernandes and former CEO of Tune Money Sdn Bhd, an outfit of AirAsia Group, and BNM Governor, BigPay had started to offer a variety of financial technology products including microloans known as “Buy Now Pay Later (BNPL)” scheme, and also the so-called “instant digital loan” in Malaysia wherein borrowers can obtain instant personal loans within minutes HERE.

What an innovation! Such products are undoubtedly extremely attractive for low-income groups such as students, B40 and others who may normally face difficulties in obtaining a bank loan due to their financial track record. This BNPL scheme and instant digital loan will encourage the said low-income group to “SPEND NOW and THINK ABOUT THE REPAYMENT LATER.”

Yours truly opines that this is a dangerous trend which might result in B40 especially students to start their lives with debts which they will not be able to repay or they will be burdened with debts. 

It is strange that BNM Governor is going to make her grand announcement of the five (5) successful applicants for this Digital Banking License when there are no existing regulations to control and to protect members of the public especially the B40, students and the like. 

To Date No Regulations are In Place To Regulate Digital Banking

On 15.3.2022, it was reported in The Edge that Ministry of Finance, BNM and the Securities Commission (“SC”) are “spearheading collaborations with other agencies” to draft a new law known as the Consumer Credit Laws to regulate BNPL schemes and the like HERE. 

For the benefit of BNM, Minister of Finance and SC, since 2021 BNPL schemes have already been in use in e-commerce namely Shopee. This is how BNM and SC protect public interest in Malaysia! Of course, proactivity is not the norm in Malaysia. The authorities will only become “kalam-kabut” when there were public outcries and/or many B40s are in hot soup! 

China and Australia Have Regulations In Place To Regulate BNPL Scheme

In China, the Banking Regulatory Commission has capped interest rates and financing fees for microloans (including BNPL schemes), and banned students from access from microloans in order to protect them. HERE.

In Australia, its Financial Industry Association has developed a binding Code of Practice for BNPL Providers whereby these providers are obligated to ensure that their terms and conditions are written in plain English and are clearly distinguishable from marketing materials. There are stringent rules that regulate these BNPL providers in their advertising materials for these BNPL schemes in order to protect vulnerable consumers like the B40s, HERE.

On Paper BNM Seems To Know Its Role As a Central Bank

On 31.12.2020, BNM seems to know its role as the central bank in Malaysia and came up with the Licensing Framework for Digital Banking Digital (“FRAMEWORK”), HERE.

For ease of reference, paragraph 1.1 of the said Framework dated 31.12.2020 states as follows:

“The Bank endeavours to ensure the regulatory framework remains conducive for enablement of these innovations in a safe and sound manner that supports transformation of the financial ecosystem to meet future economic needs of the nation, and promote sustainable and inclusive financial sector.”

Under paragraph 8.2 of the said Framework, the criteria to be taken into account when assessing the suitability of the shareholders of a licensed digital bank include the following:

In the Frequently Asked Questions for the said Framework:

 “…nature and sufficiency of the financial resources of the proposed licensed digital bank shareholder as a source of continuing financial support to a licensed digital bank as well as the business record and experience of the shareholder”. 

• Robust risk management and compliance capabilities, which may be demonstrated by a track record of operating in a regulated environment;

• Ability to continuously serve as a source of financial strength to the proposed licensed digital bank. 

See in HERE. 

PN17 Companies Or Its Related Companies

Normally, if a company is being classified under PN17 or to be classified under PN17 or pending formal classification of PN17, no financial institution will grant them any banking facilities to it or its related companies or subsidiaries.  As for the case of AirAsia has been classified as PN17 company in January 2022.

On 14.1.2022, it was reported in The Edge that in July 2020, the auditor for AirAsia (Messrs Ernst & Young) had “issued an unqualified audit opinion with material uncertainty relating to going concern”, HERE.

AirAsia was given 12 months to regularise by 7.1.2022.  On 7.1.2022, AirAsia sought an extension of time from Bursa KL (“BSKL”) but it was turned down by BSKL. On 13.1.2022, AirAsia announced in BSKL that it had been classified as a PN17 company, HERE. 

The International RM200 mil Bribery Scandals Involved PN17 AirAsia Executive 1 & 2 & Airbus

It must be noted that in the Judgement of UK Crown Court in January 2020, it was clearly stated that AIRASIA executives 1 and 2 have been found to have received RM200 million in BRIBES from Airbus in exchange for orders of aircraft, HERE. 

This news had been widely publicisely internationally. Airbus agreed to pay over $3.9 Billion in Global Penalties to Resolve Foreign Bribery Scandals, HERE.

However, in Malaysia the two criminals known AirAsia executives 1 and 2 were allowed to run amok in the corporate world. Authorities in Malaysia and regulatory bodies are playing dumb to condone and encourage such briberies.

Lapsed of More Than Two Years Chairman of SC & SC Playing Dumb

Early 2020 SC and Bursa KL had commenced investigations into this international bribery scandals. SC had instructed Bursa KL to stop its investigation as it was taking over the task. After a lapsed of two years, Datuk Syed Zaid Albar the chairman of SC and SC are still keeping their elegant silence over the said investigations, HERE.

Lets see for how long more Datuk Syed Zaid Albar and SC are going keep their elegant silence over this international bribery scandals.

We can only hope that Bank Negara and its Governor are not in the same category as Datuk Syed Zaid Albar and SC!.

Danajamin Approved RM500 mil Loan Guarantee Facilities To PN17 AirAsia

Recently Danajamin headed by Datuk Nazir Razak had granted RM500 million loan guarantee to PN17 AirAsia. It is an open secret that Datuk Nazir Razak is the buddy of Tan Sri Tony Fernandes of PN17 AirAsia. Thanks God that AirAsia rejected the RM500 mil facilities because its directors, Tan Sri Tony Fernandes and Datuk Kamarudin Meranun refused to stand as guarantors for the said RM500 mil facilities otherwise the Rakyat may be burdened by this RM500 mil. This is the level of confidence that both directors, Tony and Kamarudin have for PN17 AirAsia. See in HERE.

In 2019 The Executive Chairman of AirAsia, the famous Datuk Kamarudin Meranun Fined For Insider Trading

The famous Datuk Kamaruddin Meranun is the executive chairman of AirAsia Group. In 2019 Kamaruddin was not charged by SC for insider trading during the infamous MAS-AirAsia share SUAP and he was only fined RM3.6 million, which was a pittance and extremely unusual.  Kamaruddin trade shares bought under the names of Nor Ashikin Khamis and Malizan Mahmood. SC had explained:

“The amount disgorged from Datuk Kamarudin Meranun is equivalent to three times the difference between the price at which the shares were acquired and the price at which the shares would have been likely to have been acquired at the time of the acquisition, if the information had been generally available.” In HERE.

For the benefits of BNM Governor and Tengku Zafrul, the best Minister of Finance in Malaysia of all times, the above information are in the public domain. Can a central bank in any part of the world still consider, let alone approve the digital banking license or any financial license to a PN17 company’s related companies or its subsidiaries? 

So-Called Bank Negara Framework For Digital Banking

An applicant is further required to provide Bank Negara Malaysia with an independent external review on the feasibility of the business plan as per paragraph 10.4 of the said Framework. The said independent external review must also include an assurance that the applicant’s financial statements are accurately prepared and adequately disclosed to Bank Negara Malaysia.

According to the above financial statement filed with the Suruhanjaya Syarikat Malaysia as of 14.3.2022 showed that BigPay (M) Sdn Bhd had made losses to the tune of RM59,062,000.00!

BigPay Later Sdn Bhd

BigPay Later Sdn Bhd, another outfit of AirAsia, was only incorporated on 20.7.2020 with no financial information filed with SSM for 2022.  

Good Governance

For the sake of good governance and the objective of protecting public interests, both BNM and the best Minister of Finance of Malaysia should not wear blinkers and approve any form of financial licenses in a wanton manner to PN17 companies or its related companies, which are under controlled friends.

Public interest dictates that Minister of Finance and the BNM Governor must clarify this matter before approving the Digital Banking Licence to the five selected companies.