Using EPF savings as collateral for loans is risky

PRIME Minister Datuk Seri Anwar Ibrahim announced in the Dewan Rakyat on Thursday that contributors who are in dire straits would be allowed to take up loans from a bank with collateral from their Account 2 Employees Provident Fund savings, “EPF-guaranteed bank loans for those in bad financial standing, says PM” (The Star, March 9; online at

Using EPF savings as collateral for a bank loan is risky and should not be considered. What would happen if the borrower failed to make the required repayments? His EPF savings will still be reduced because the sum owed will eventually be taken out of his account.

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