Malaysia's $1.3b support package to prevent bad loan spike

The SME sector received similar support during the pandemic era.

The Malaysian central bank’s billion-dollar support package will help prevent a spike in bad loans for its local banks, said S&P Global Ratings.

Bank Negara Malaysia (BNM) announced an approximately $1.3b (MYR5b) stabilisation relief facility for small and medium enterprises (SME SRF) last 28 April 2026.

Whilst banks are sound, after low credit losses in 2025, this package will reinforce asset quality, the ratings agency said in a report published on 30 April.

"The central bank's facility will support SMEs facing operational disruptions and cash flow challenges. Guarantees under the package, especially for SMEs without sufficient collateral, could ensure flow of credit to this sector," said Nikita Anand, credit analyst at S&P Global Ratings.

"The SME sector received similar support during the pandemic. In our view, the latest facility will prevent a spike in NPLs, as it did during that time,” Anand said.

Utilization of the support is expected to rise if the war continues or if the fuel subsidy structure in Malaysia changes significantly.

“Given the SME sector's importance, we also anticipate further assistance, if needed,” Anand said.