1MDB may have entered into joint ventures with heavyweight companies in a bid to move forward with its projects amid financial woes but the fund's troubles are now also affecting these partners.

Finance Minister II Johari Abdul Ghani said banks are reluctant to give out loans to the 1MDB's project partners due to the Malaysian fund's issues, The Edge Financial Daily reports today.

"Right now the issue is... you know Tun Razak Exchange (TRX), we have a joint venture with Land Lease (a company listed in Australia). They cannot move because the project partners cannot get financing because of the 1MDB issue.

"In Bandar Malaysia, (it is) also the same thing. So it is very difficult for local or international banks to finance when you have issues in 1MDB," Johari is quoted as saying.

He said this was why the parliamentary Public Accounts Committee (PAC) had recommended that 1MDB's assets and subsidiaries be placed directly under the Finance Ministry.

Plans to transfer 1MDB's assets to the ministry's investment arm, Minister of Finance Inc, are on track, he said.

"We are finalising the agreement," Johari is quoted as saying.

On a related matter, the deputy minister said a caretaker board comprising officials from the Finance Ministry will be appointed once the current 1MDB board of directors have resigned, effective May 31.

In June 2014, it was announced that Land Lease would be the project partner for 1MDB to develop the RM8 billion Lifestyle Quarter component of the TRX.

The development over an area of 17 acres, to comprise a shopping centre, three residential towers and a hotel, with the construction scheduled to have started late last year.

In December last year, 1MDB also announced the sale of a 60 percent stake in Bandar Malaysia to a consortium comprising Iskandar Waterfront Holding and China Railway Engineering Corporation.

Bandar Malaysia will be built on the 486-acre land bank of the former Royal Malaysian Air Force airbase in Sungai Besi land bank.

Both projects have yet to proceed.