KUALA LUMPUR, Feb 24 — Bank Negara Malaysia today disputed assertions that its new loan approval guidelines are overly strict and to blame for the auto industry’s recent sales dip, Bernama Online reported.

On Wednesday, the Proton Edar Dealers Association Malaysia (Peda) urged that the new financing guidelines be re-examined, claiming that sales have been affected as only 30 per cent of applicants have managed to secure car loans since its implementation.

“Individuals and households must borrow within their means,” the central bank said in a statement today, after a meeting with senior officials of Proton, Perodua, the Malaysian Automotive Association, Proton Edar Dealers Association and Perodua Dealers Association and DRB-HICOM.

Bank Negara said it would clarify the stricter documentation requirements with financial institutions to speed up credit applications, but noted that vehicle loan approvals have kept steady at around 54 per cent up to January.

“This (clarification) will contribute towards more efficient procedures and processes for vehicle financing,” it said.

Yesterday, Consumer Association of Penang chief SM Mohamed Idris urged Bank Negara to resist pressure to ease the guidelines for loan approvals.

“Malaysian household debt service ratio reached 47.8 per cent in 2010. This means that on average almost half of a household’s income goes to repaying debts,” he said in a statement yesterday.

“Thus after paying off the debt there is not much left to spend on food, transport, education and for emergencies. Should the breadwinner fall sick or lose his job, the family will find it hard to make ends meet and loans may be defaulted.”

Mohahmed Idris further noted that, at 26 per cent, delinquent hire-purchase loans were the biggest contributor to the estimated 41 bankruptcy declarations every day in 2011.