QUESTION 2

SBKB was established in 2005. It operates a three-star resort in Cherating, Pahang. On 01 January 2019, the company obtained the following financing package from Urban Bank Berhad to finance its business operations: -

FACILITY AMOUNT TENURE CONTRACT PURPOSE

Working Capital RM600,000 3 years Murabahah To finance working capital requirement

Fixed asset financing RM2,000,000 10 years Tawarruq To finance the development of the resort

(a) Based on the financing above, explain TWO (2) types of collateral that can be used to secure EACH OF FINANCING obtained by SBKB?

(8 marks)

In March 2020, the Movement Control Order (MCO) announced by the Government due to COVID 19 pandemic has affected the cash flow of the company.

(b) Discuss THREE (3) problems that may face by the company due to COVID 19

pandemic that may affect the loan repayment.

(c) To facilitate business that are impacted by the COVID-19 pandemic, Bank Negara Malaysia has announced the 6-months deferment to SME companies in Malaysia that took effect in March 2020.Explain the purpose of a bank giving deferment to companies.How can this assist SBKB?

(10 marks)

(d) The 6-months deferment ends in August 2020. Thus, the company needs to continue its installment for fixed asset financing in September 2020. The due date for the loan repayment is every 25th of the month.

Explain the status of the fixed asset financing for each of the scenarios below, in accordance with the Guidelines for Classification and Impairment Provisions for Loans/ Financing issued by the Central Bank of Malaysia, dated 16 April 2015.

(i) The company doesn't pay the installment due on 25th September 2020. What is the

status of the account as at 30th September 2020?

(3 marks)

(ii) The company still doesn't pay the subsequent installment due on 25th October 2020, 25th November 2020 and 25th December 2020. What is the status of the

account as at 31st December 2020?

(3 marks)

(iii) As Credit Recovery Officer of the bank, formulate action can be taken by the bank in managing scenario (ii) above. Discuss TWO (2) reasons to support your proposed action.