(a) Maju Sdn Bhd was established in 2015 and manufactures cooking oil for the local market....

   

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(a) Maju Sdn Bhd was established in 2015 and manufactures cooking oil for the local market. On 01 March 2019, the company obtained the following financing package from CCB Bank Berhad to finance its business expansion. FACILITY AMOUNT TENURE CONTRACT PURPOSE Cash Line Working RM 500,000 3 years Tawarruq To finance working capital Capital Fixed asset financing Tawarruq RM2,000,000 12 years of the To finance the purchase factory. (ii) The customer made payment on the overdue amount en 30 September 2020. Subsequently, the payment is up-to-date every month with no arrears. Customer has been rompt in servicing its installment. However, during a site vision 30 November 202 it was found that the factory was closed. The factors phone numbe and directors also could not be contacted. Further checking with the other nearest story revealed that the factory has been a andoned for one year. Explain the status of the financing as at 30 November 2020 in accordance with the Guidelines for Classification and Impairment Provisions for Loans/Financing sued by the Central Bank of Malaysia, dated 16 April 2015. (iii) Suggest ONE (1) possible reason why the company can still pay its installment every month even though the factory was not in operation and cannot not be contacted. Explain the potential risks to banking institutions associated with the suggested reason. (6 marks) (a) Maju Sdn Bhd was established in 2015 and manufactures cooking oil for the local market. On 01 March 2019, the company obtained the following financing package from CCB Bank Berhad to finance its business expansion. FACILITY AMOUNT TENURE CONTRACT PURPOSE Cash Line Working RM 500,000 3 years Tawarruq To finance working capital Capital Fixed asset financing Tawarruq RM2,000,000 12 years of the To finance the purchase factory. (ii) The customer made payment on the overdue amount en 30 September 2020. Subsequently, the payment is up-to-date every month with no arrears. Customer has been rompt in servicing its installment. However, during a site vision 30 November 202 it was found that the factory was closed. The factors phone numbe and directors also could not be contacted. Further checking with the other nearest story revealed that the factory has been a andoned for one year. Explain the status of the financing as at 30 November 2020 in accordance with the Guidelines for Classification and Impairment Provisions for Loans/Financing sued by the Central Bank of Malaysia, dated 16 April 2015. (iii) Suggest ONE (1) possible reason why the company can still pay its installment every month even though the factory was not in operation and cannot not be contacted. Explain the potential risks to banking institutions associated with the suggested reason. (6 marks)

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Answer One possible reason why the company can still pay its installment every month despite the fac... View the full answer