Fixed interest rates on moneylending


  • Nation
  • Thursday, 10 Apr 2003

Reports by ESTHER NG, DALILAH IBRAHIM AND IZATUN SHARI

THE Moneylending (Amen-dment) Bill was passed by the Dewan, paving the way for interest rates for moneylending purposes to be fixed. 

Housing and Local Government Minister Datuk Seri Ong Ka Ting said that with the amendment, moneylenders could no longer impose interest rates as they pleased on unsettled loans, because a daily interest rate was fixed at 8% per annum. 

He said the amendment also specified that the interest rate for collateral loans was fixed at a maximum of 12% per annum and for non-collateral loans, the interest was fixed at a rate not exceeding 18%. 

“If the rate imposed exceeded the fixed rate, the loan agreement signed can be void and invalid,” Ong said when tabling the motion earlier. 

The amendment, he said, would allow the minister to appoint a Registrar of Moneylending and his officers to replace the present assistant registrar, whose positions were currently held by state secretaries and the Kuala Lumpur city mayor. 

He said the registrar would operate under the ministry to control, monitor and enforce moneylending activities. 

“Licences will not be given to individuals or companies that had been declared bankrupt, convicted of criminal offences or breach of trust under the Penal Code and fined more than RM10,000,” he said, adding that those whose licences had been previously revoked would not be eligible to apply for the licence.  

Ong also said that permits to advertise must be obtained from the registrar. 

He said the amendment also emphasised the need to obtain licences to run moneylending businesses and those found guilty of not doing so could face a fine of between RM20,000 and RM100,000 or jail not exceeding five years and caning for repeat offences  

The amendment, he said, would also provide a jail penalty of not more than two years and caning on those found guilty of making threats and causing injuries to borrowers and public officers. 

He also said the amendment would empower the police to act against illegal moneylending activities and related offences.  

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