(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 Cash Line Working Capital Fixed asset financing AMOUNT RM 500,000 RM2,000,000 TENURE CONTRACT 3 years 12 years Tawarruq Tawarruq PURPOSE To finance working capital To finance the purchase of the factory. (ii) The customer made payment on the overdue amount on 30 September 2020. Subsequently, the payment is up-to-date every month with no arrears. Customer has been fompt in servicing its installment. However, during a site vision 30 November 202 it was found that the factory was closed. The factor's phone numbe and directors also could not be contacted. Further checking with the other nearest story revealed that the factory has been aandoned 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.
(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 Cash Line Working Capital Fixed asset financing AMOUNT RM 500,000 RM2,000,000 TENURE CONTRACT 3 years 12 years Tawarruq Tawarruq PURPOSE To finance working capital To finance the purchase of the factory. (ii) The customer made payment on the overdue amount on 30 September 2020. Subsequently, the payment is up-to-date every month with no arrears. Customer has been fompt in servicing its installment. However, during a site vision 30 November 202 it was found that the factory was closed. The factor's phone numbe and directors also could not be contacted. Further checking with the other nearest story revealed that the factory has been aandoned 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Maju Sdn Bhd was established in 2015 and manufactures cooking oil for the local market.
(а)
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
Сapital
To finance working
сapital
RM 500,000
3 years
Tawarruq
То
finance
the
Fixed asset
Tawarruq
12 years
purchase
factory.
RM2,000,000
of
the
financing
(ii)
The customer made payment on the overdue amount en 30 September 2020.
Subsequently, the pament is up-to-date every month wih no arrears. Cusomer has been rompt
in servicing its installment. However, during a site visi on 30 November 202 it was found that
the factory was closed. The factory's phone numbe and directors also could n be contacted.
Further checking with the other nearest story re ealed that the factory has been a andoned for
one year.
Explain the status of the financing as at 30November 2020 in accordance wih the Guidelines for
Classification and Impairment Provisins for Loans/Financingsued b 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.
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