Bank Negara Malaysia (BNM) has stipulated that applicants for personal loans exceeding RM100,000 must attend and complete a financial education module.
In a personal financing policy document issued today, the central bank stated that these conditions are among the requirements set by BNM.
The policy document aims to introduce prudent and responsible financing practices in the provision of personal financing by financial institutions, as well as encourage a prudent borrowing attitude among consumers.
It also ensures that financial institutions clearly report BNM’s expectations on the maximum limit of 10 years for personal financing secured by property or offered under home financing products.
In addition, this document also prohibits personal financing offers that charge interest or profit through the flat rate method or Regulation 78, which refers to the method of calculating interest/profit.
Fierce competition in the credit market has also changed personal lending practices by credit providers, thus contributing to the burden of household debt that they cannot afford.
Among the key concerns identified is the emergence of new financing products that appear affordable but actually encourage unwise debt accumulation.
This policy document comes into effect from today and applies to all licensed banks, licensed Islamic banks and designated development financial institutions.
