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Johor’s credit cooperatives reject Bank Negara’s new regulation on personal loan


BATU PAHAT: Credit cooperatives in Johor have objected to Bank Negara’s stringent new regulation on personal loan and appeal 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 no longer qualified for loan under the latest order.

“There are more than 50,000 members, however, 90% unable to take loan now. So, how are we going to survive without loaners?

“We hope Bank Negara and the Government would review the matter and keep us out of the ruling as we are the small lenders,” he said during an interview on Saturday.

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 caps, personal loans could be paid back over a period of up to 25 years.

These new measures to tackle household debt are extended to all financial institutions and credit cooperatives regulated by Bank Negara, the Malaysia Co-operative Societies Commission, Malaysia Building Society Bhd, and Aeon Credit 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 makes most of the members unqualified even for a small loan from us now,” he said.

Sazali said credit cooperatives provided loan not exceeding RM50,000 and most of the members who are from supporting group applied loan just between RM15,000 and RM20,000.

He said the government ought to look at the actual problems, which were caused by the commercial financial institution that competing for business unhealthily.

“Some have given out large amount of personal loan of up to RM250,000 with repayment up to 25 years and those declared bankrupt are caused by 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 go 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 imposed of such ruling was unfair to the credit cooperatives as they were unaware of the regulation till it was announced.

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

   

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