BFW3841 Assignment: Credit Analysis and Lending Management Report

This report analyzes credit analysis and lending management through three parts. Part A examines the case of Bank Pertanian Malaysia v. Blue Valley Plantation Bhd & ORS, focusing on the 6 Cs of credit analysis, the validity of charges, and the shortcomings of the bank in the case. Part B delves into the case of Bank Bumiputra Malaysia Bhd. Kuala Trengganu v. Mae Perkayuan Sdn. Bhd. & Anor, discussing bridge loans, breach of contract, and the bank's failures. Both parts provide summaries and critical analyses of the cases. Part C discusses the article 'Operating with Impunity' in relation to credit analysis and lending management. The report incorporates legal and financial concepts to provide a comprehensive understanding of credit risk, lending practices, and the importance of due diligence in banking operations. The report highlights the importance of ethical conduct and legal compliance in lending practices.

Running head: CREDIT ANALYSIS AND LENDING MANAGEMENT
Credit Analysis and Lending Management
Name of the Student:
Name of the University:
Author’s Note:

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CREDIT ANALYSIS AND LENDING MANAGEMENT
Table of Contents
Assignment Part A.....................................................................................................................2
Assignment part B......................................................................................................................5
Assignment Part C......................................................................................................................8
References................................................................................................................................10

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Assignment Part A
The study is an analysis of the Bank Pertanian Malaysia vs. Blue Valley Plantation
Bhd& ORS case. The study has shown that the charge has been made in respect to the
undivided portion of the land. The study undertakes the evaluation of the 6Cs. Depending on
the analysis of the 6 Cs which includes the analysis of borrower’s character, capacity of
repayment, capital, confidence of the borrower, collateral, conditions the financer has
financed the money to the 1st defended. This includes the form 16A (Firmansyah&Tisnanta,
2015). The study includes the explanation of the regulation of the order for sale, vacant
possession portion of land occupied by the bona fide purchaser. The study has recognised that
the first defendant is the registered proprietor of the piece of land which is measured around
508.875 acres situated at Cameron Highland (Abdullah et al., 2019). This has been
recognised that a portion of land measuring about 300 Acre has been sold by the first
defendant to the intervener during 1992 and 1993. Since then the intervener has occupied the
land only with their respective portion. During 1995 the jute industry Sdn BHD was
purchased the first defendant’s portion of land through obtaining RM15 million loan from the
Plaintiff which has been recognised as the secured upon 3rd party charges over the first
defendant’s portion of the land (Salleh et al., 2017). However the land was not registered by
the Plaintiff as the land was not subdivided. Latter on the charge has been filed through
obtaining consent. After obtaining the consent,plaintiff’s solicitors prepared the charge
document in Form 16A and had the same executed by the first defendant as charger. In the
form 16A this has been stated that only 300 acres land was to be charged but upon submitting
the Form for registration at the Land Office, the solicitors, without the consent or knowledge
of the chargor, or the interveners, deleted the figure “300/508.875” in the Schedule to the
Form, and substituted it with the word “semua”, indicating thereby that the charge was in
respect of the entire land. Due to this a third party charge over the entire land has been

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registered in favour of the plaintiff. After that due to the default by the borrower the plaintiff
initiated foreclosure proceeding against the land under s. 256 National Land Code (‘NLC’)
(Dahlan et al., 2018). This has been observed that the primary issue has been whether, on the
facts and in the circumstances, there existed ‘cause to the contrary’ as to prevent the court
from making the order for sale sought. Along with that the held has been made depending on
the different sections.Following the under section 256 (3) NLC, this has been recognised that
the onus is on the charger or the interveners to show the existence of “cause to the contrary”.
In doing this the intervener has a chance to prove that the chargee himself is not free from
fault and he was guilty of irrational conduct. Another held refers to the duty of the Solicitor
(Lowry& Edmunds, 2017). This has been recognised that the solicitor’s duty is to ensure the
charge documents. This refers to their duty of checking and identifying that whether all the
documents are being signed off properly by the chargor and charge. Along with that in this
matter this has been observed that the solicitor knew that the actual possession of that specific
potion of the land belongs to the interveners and the first defendant did not beneficially own
the entire land. Alongside, the Plaintiff’s interest is only associated with the 300acres of land.
Hence, the charges are only made on the undivided land which is prohibited under section
241 NLC (Mohd et al., 2016). However, on the next day when the charge document has been
presented an amendment has been made prior to knowledge of charger and interveners. This
has been observed that plaintiff as chargee has failed to disclose all the material facts in their
application during the presentation of the proof into the court. This has also been observed
that Indeed, the plaintiff has been guilty of not only concealing material facts but also of
fraudulently and dishonestly falsifying the facts to this court. Hence, Plaintiff must need to
comply with the O. 83 r. 3 Rules of the High Court 1980 (Cahn, 2017). Along with that
Plaintiff must need to give particular of each and every person who has been into the
possession of the land. Another held has been recognised into the creation of the charge.

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Here, at the time of creation of the charge the 1st defender was mere a trustee and also not the
actual beneficial owner of the portions of the land which has been purchased by the
interveners (McCarthy&McCorkindale, 2017). On the other hand the borrower should
represent a responsible attitude in returning the borrowed money. Hence in this case study
this has been recognised that the borrower has been responsibly returning the borrowed
money however the lender or the financer makes things difficult through charging penalty
which is not enforceable by low. Along with that the extensive charge of the interest makes
the loan into a bad loan for the borrower. This has also noticed that with the increase into
debt fund this has reduced the profitability and increased the debt to equity ratio.tha land has
been financed and this has been recognised that the efficiency ratio has needs to be calculated
on the 300 aces rather than calculating on the whole portion of land.
While the judgement has been made, on the foreclosure this has been recognised that
the proceeding filed by the plaintiff against 1stdefendant for an order of the sale of property or
land is a subject matter of 3rd party charge created by the 1st defendant during the period of 26
December, 1995. However, the matter has been recognised in favour of plaintiff in respect to
the loan facility of RMI 15000000, where the amount has been granted by the Plaintiff to 3rd
party borrower. From the judgement this has been recognised that the purpose of the loan is
to finance the purchase of the land which is having its area of 300 acres from the 1st defendant
(Malik, Golding&Lippert 2018). Hence, the 1st defendant has been still recognised as the
registered owner of the undivided portion of the land. However, the said 3rd party charge was
to serve the plaintiff’s interest in the 300 acres of the said land and the rest of the portion of
the land sold to various 3rd parties who are interveners in this proceeding. On the other side,
before the creation of the 3rd party charges in favour of the Plaintiff all the possessions were
occupied. All the interventionsthose were already in the possession of the land but the

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judgment has been formulated in favour of the actual registered owner. Along with that the
lender’s interest has been identifieddepending on the area of finance (Sheldon, 2015).
Assignment part B
This part of assignment sheds light on the Bank Bumiputra Malaysia Bhd. Kuala
Trengganu vs.Mae PerkayuanSdn. Bhd. & Anor case (Islamicbanker's Weblog, 2019). The
study includes the discussion on the bridge law agreement where the claim for recovery has
been appealed into the court.This study includes the identification of bridge finance or bridge
loan.Since the bridge loan allows the borrower to take loan for shorter period of time this
allows lender to charge a high interest rate. Along with that the loans allows the borrower a
quick arrange of money hence this loan or finance can be identified as the good loan for a
lender. The study analyses on whether the damages sufficiently proved or whether damages
are too remote. The study observes that the first respondent has been desirous towards
developing certain lands in housingestate and also of purchasing the land in Tampin for the
purpose of developing into housing estate. The study recognises that the first respondent
approachedthe appellants who after studying the details of the proposals and approved
bridgingfinance operated under an overdraft facilityto the first respondent (Laldin, &Furqani,
2018). However, on the failure of the respondent the appellant withdraws the facilityand
claimed for the amount outstanding inclusiveof interest and costs. Further, the trial held for
the judgement depending on the appellants’ apple. At the initial stage this has been
recognised that there was negotiation between appellant and first respondent before the
positive response of giving the bridging finance and the appellants were fully known that the
first respondent would not receive any income from the project till the sign off of the sale and
purchase agreement. This has been noticed that the appellants were not entitled to issue recall
letter because of interest was not been serviced by the first respondent and also the first
respondent was not been obliged under the agreement to pay off the interest within the

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bridging period (Mikail et al., 2018). This has been recognised that the applicants were in
breach of contract while it treated the term loan as on demand loan and recalled it
prematurely beforehand without having any right to do so. Along with that the respondents
were entitled to get money for damage. This has been recognised that the loss of profit which
has been realised from the Dungun project where the 1st respondent suffered a loss was
resulted from the breach of contract from the applicants, instead off knowing the fact about
the loss by the applicants. Along with that the loss on profit claimed for the Alorgujrat project
was dependent on the application of the Dungun project. Hence, the other heads of damages
claimed by the respondents should be disallowed. Along with that this has been noticed that
due to the interconnection between the projects the appellants’ claim for interest on theloan at
the rate agreed in the agreement, forthe period after the overdraft was prematurelyrecalled,
must be disallowed. This also includes the reason of breach of contract (Abdullah et al.,
2019). This has been recognised that the lender of the loan has been reduced with the
profitability as both the lands are associated with each other’s as the respondent fails to serve
the interest. This has reduced their profitability on investment and reduces the EBIT. Along
with that with the reduction into the earning opportunity this has reduced opportunity of
earning cash inflow.
On the next phase the judgement was made on the ground of the breach of contract.
On the desire of developing housing in the Dungun into the allotted land 3243 acres and also
making 6 lots of agricultural land in Tumpun in total of 29.1 acres the judgement were made.
This has been recognised that the first respondent approachedthe appellant, Bank Bumiputra
Malaysia Bhd.,Kuala Trengganu, for bridgingloan for the Dungun Project and for the money
topurchase the land for the Alor Gajah Project. This has been observed that in the proposal
the first respondent has agreed to givein writing to grant what it called‘overdraft facilities’ to
the first respondent, inthe sum of RM4,500,000. The case study has shown that the position

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by end of July 1985 was thatalthough there was evidence that the firstrespondent had
completed the “earthworksand site preparation” (Kamaruddin, Wahab&Anuar et al., 2018).
However, no evidence had been provided which can prove that the amount disbursed by the
Bankhad not been spent by the first respondent forpurposes of the development of the
DungunProject. The study has recognised that the solicitor has demanded an amount of
RM4,322,813.04 being the main sumplus interest outstanding. After that the bank caused to
be issued a write in the High Court at Kuala Trengganu againstthe first respondent for
recovery of the amountoutstanding on the overdraft facility, interestthereon at the agreed rate
and costs. Along with that thebank writes and submits to the court interestrate thereon at the
agreed rate and costs, andagainst the second and the third respondents. (Ikau, Joseph&Tawie
2016). Hence the first respondent filed a defence and claimed for breach of contract and
second and 3rd respondent acted in a similar way and filed case similar to the 1st respondent.
However the high court of Kuala Trengganu found the fact that on 29th march 1985 an
amount of 2.1 million has been disbursed for the purchase of the land in Alor Gajah project.
Along with that the court found that an amount of RM1,104,286.50 also was disbursed for the
productions of architect'scertificates showing that the works specifiedtherein had been
completed. At the end the court found that the bank had committed a breach of bridging loan
agreement and dismissed the plaintiff's claim against the respondents. Along with that he
awarded the 1st respondent with the amount of RM 5 million for aggressive damage, RM 6
million for the Dungun project and RM 6 million for the Alor Gajah Project. In respect to the
letter, both the first and second witness could not admit that there was nothing in the
agreement which makes the first respondent to pay by fixed instalment and this disallows the
charge of 1% interest penalty by the bank. Lastly, this has been recognised that the trial
judgement has taken in favour of the respondent and dismissed the claim and allowed the
counterclaim (Noor et al., 2018).

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Assignment Part C
This part of assignment sheds light on the operation with impunity. This has been
recognised that a restaurant naming Ali cafe Tomyam Seafood restaurant has built their cafe
illegally in to the road by occupying the road space which is not purchased or allotted to them
(Stone et al., 2018). This has been an illegal work to do however, for a longer period of time
no action has been taken. The restaurant congestion to contribution and the car parking in on
the road has created issue with the pedestrian and social law. This has created issue into the
traffic system. Since the restaurant was built illegally this has to be demolished (Sarkom et
al., 2018). This has been recognised that the restaurant was built without the authorization of
the Kuala Lumpur City Hall. However, this has been recognised that the illegal constriction
of that restaurant was known o the Kuala Lumpur City Hall. This has been noticed that over
the years several cases has been lodged against this illegal construction but while the action
was to be taken they were asked to be hold back. Since the construction is illegal and
reserved the road, this can be demolished under street drainage and building Act (Afroz&
Rahman, 2017).With the acquisition of the land the restaurant involves into the obligation of
criminal Act 101. The restaurant has been running the business without having authorisation
from the government authority as a result of which the restaurant faces an ethical dilemma
into their work process and. This has been recognised that the DKLB has been into the action
against the restraint (Hewitt, 2018). However the restaurant is an instance Restaurant the
action will be taken as per usual. While explaining the fact “Usual” DKLB explains that the
restaurant was given 7 days some time(Thestar.com.my, 2019). However, this has been
recognised that the DKBL team was given the order of demolishing the building a several
years ago but the team was instructed to stop the demolishing and along with that another
order came from the high officer of the department that the employees of the Restaurant
should not be further disturbed (Babalola et al., 2015). This has also been noticed that the

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health and the environment department have also ordered to provide a licence to that
restaurant and make that place legal. After the Order came the Restaurant started running
continuously despite breaking multiple regulations in the city. Due to located in the premium
location and having office in that area, the restaurant always remains packed up by the
customers. This has been recognised that main time at which the sales get increased is from
noon to late night. The restaurant has been holding Grade A rating due to the food quality,
customer’s satisfaction and cleanses (Thestar.com.my, 2019). However after appealing
against the restaurant the Ali hopes that the restaurant gets allows running the business. This
has been recognised that while contacted to the SKL the parcel of land is gazetted as open
space for public use. This has been recognised that the Malaysian public service association
identifies the issue with the restaurant. This has been said before, that the payment of tax to
the land can be identified as the counter at the respective PTG offices. This has been
recognised that the land at which the restaurant is situated belongs to the federal territories
ministry (Osman et al., 2017). However this refers to as PTG but this also has been
recognised that the PTG has been independent from the Federal territory. This has happened
after election. Lastly, this also been identified that a hall of .7 ha has been handed over to a
political party by the previous British general administration. This is the reason why the
construction has not been demolished till date.

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