Credit cooperatives upset over new regulations on loans

BATU PAHAT: Credit cooperatives in Johor have objected to Bank Negara’s stringent new regulations on personal loans and appealed to the government to review the directive.

Koperasi Jess Johor chairman Sazali Abdul Hamid, who represented 31 credit cooperatives in the state, said the new rule is a silent killer to credit cooperatives as majority of members are no longer qualified for loans under the latest order.

There are more than 50,000 members, however, 90% are unable to take loan now.

“We hope Bank Negara and the government would relook into the matter and keep us out of the ruling as we are the small lenders,” he said during an interview.

Under the new rule set by Bank Negara since earlier this month with the aim of helping to reduce household debt in the country, anyone taking a personal loan can now only do so for a period of up to 10 years.

Before the new cap, personal loans could be paid back over a period of up to 25 years.

These new measures to tackle household debts are extended to all financial institutions and credit cooperatives regulated by Bank Negara, the Malaysia Co-operative Societies Commission, Malaysia Building Society Bhd, and AeonCredit Service (M) Bhd.

All these institutions will also need to follow responsible lending limits.

New borrowers, especially those with lower incomes, can only take on debt amounting to 60% of their monthly take home pay.

Sazali said prior to the new regulations, the 60% of debt only included deductions on payslip such as housing, cooperatives, insurances and government loans.

“Now, loans from other sources which are not in the payslip such as housing and car loans as well as credit card are also counted, it now disqualifies most of our members from taking even a small loan from us,” he said.

Sazali said credit cooperatives provided loans not exceeding RM50,000 and most of the members applied for loans that were between RM15,000 and RM20,000.

He said the government ought to look at the actual problems which were caused by commercial financial institution.

“Some have given out large amounts of personal loans of up to RM250,000 with repayment up to 25 years but those declared are people who took loans from commercial banks, credit cards or others,” he claimed.

“Credit cooperatives are not the cause, for instance, since Koperasi Jess established 64 years ago, we have no members who were declared bankrupt because of credit cooperative loan.

“We are not against such ruling to treat household debt, but we hope the government will make the right prescription on the actual cause of the problems,” he claimed.

Sazali said they would send a letter of appeal to the Bank Negara and submit a memorandum to the Prime Minister on their plight.

He said the sudden implementation of such ruling was unfair to the credit cooperatives as they were unaware of the regulation until it was announced.

He added that they were also not consulted prior to the implementation of the ruling and many of them still have not received the directive in black and white from Bank Negara.