This represents a significant shift in CGC’s strategic orientation and is validated by studies of the experiences in other countries that have found such advisory support to be critical in enhancing the viability of SMEs. A number of recent initiatives under CGC’s transformation plan deserve mention. These include widening the scope of guarantees to also cover financing by Islamic banks and development financial institutions, introducing a new guarantee scheme for start-up SMEs, participating in Malaysia’s first synthetic securitisation of SME loans, introducing an equity financing arm, and introducing risk-based models for determining guarantee fees. The establishment of the SME Credit Bureau is indeed a watershed event in CGC’s evolution. As a source of credible and reliable credit information that serves the needs of both the SMEs and the potential financiers, it is a natural progression of CGC's continuous effort to enhance access to financing by SMEs. The establishment of a SME Credit Bureau by CGC and D&B would no doubt complement the other initiatives of the Government and the financial sector. The significance of the SME Credit Bureau lies in dispelling the general misconception that SMEs pose higher financial risk to financiers, lack financial management disciplines and would be unable to provide relevant financial information to their financiers to facilitate assessment and monitoring of loans extended to them. Yet, SMEs are often skeptical of the benefits of credit bureaus, believing them to hurt rather than assist SMEs in obtaining access to financing. The reality is very different.

The success of the principle-based approach to regulation will depend on the ability of banking institutions, individually and collectively as an industry, to make use of the flexibilities given without giving rise to excessive risk taking, overpricing, credit rationing and other actions that could threaten stability in the financial system and overall economic well-being of the nation. The key is for banking institutions to act responsibly, as the actions of banking institutions would have implications on all segments of the economy. Due attention must be given to ensure that all segments of the society have access to banking services at reasonable cost and no groups should be marginalised in this process. In this respect, while we advocate a principle-based regulatory framework, Bank Negara Malaysia will closely monitor the performance and actions of banking institutions, and would intervene and prescribe specific regulations in the event that actions by banking institutions could jeopardise financial stability and public confidence in the financial system. As a custodian of public funds, and as a service-oriented industry, the banking sector must continuously strive to maintain public confidence in the system and deliver high standards of services. Maintaining public confidence entails efforts beyond maintaining strong financial results and having a wide range of products and services for customers. As customers become more financially savvy and better informed of their rights, the conduct and practices of banking institutions will increasingly be scrutinised by the public.