Those borrowing more than RM100k to be sent for courses
PETALING JAYA: The new rule requiring personal loan applicants who borrow more than RM100,000 to attend financial education courses will help consumers make better decisions, says the Federation of Malaysian Consumers Associations (Fomca).
Its chief executive officer Dr Saravanan Thambirajah said the measure announced by Bank Negara is timely, as many borrowers underestimate repayment burdens and the risks of default.
“The modules can help high-risk borrowers understand the dangers of over-borrowing, be cautious about unsustainable commitments, and better evaluate whether the loan will genuinely serve their financial needs,” he said.
Saravanan added that financial education is critical for preventing households from being trapped in long-term hardship.
“With effective modules, borrowers will be more informed about interest costs, repayment schedules and the long-term impact on their financial well-being.”
Automotive journalist Caleb Fong said the move is good to safeguard younger or less experienced borrowers.
“For younger people like us, financial decisions can be overwhelming. The modules could be useful, provided they are practical and not filled with information we already know,” he said.
Animal activist Myza Nordin, 57, said the requirement is a brilliant move, noting that many Malaysians were already burdened by loans they could not afford.
“Servicing a large loan can be a major commitment that could take a heavy toll on borrowers and their families.
“This is especially so when people take loans simply because they can, and not because there is an urgent need,” she added.
Self-employed Padma Zachariah, 58, said servicing huge loans could have a lifelong impact.
“Having never taken a personal loan, I can see the value of ensuring people understand the responsibility that comes with borrowing such large amounts,” said Padma.
Finance executive Kamal Kanapathy, 50, said the policy is a significant step forward, but its success would depend on implementation.
“The quality and accessibility of the financial education modules will be paramount.
“The provision empowering lenders to recommend the module to high-risk borrowers, for any loan amount, would also be a welcome safeguard that should be applied diligently,” he said.
Entrepreneur Charles Manickam, 58, said the initiative would help individuals and households exercise greater care in managing their finances.
“It will also create greater awareness of potential risks and pitfalls, including legal implications and insolvency if debts are not paid,” he said, though adding the success of such a programme was “debatable”.
Accountant Long Paul Lin, 48, said the new policy could help prevent more young people from being declared bankrupt.
“Banks easily give out personal loans and sometimes individuals take the maximum amount they qualify for without worrying about the consequences. As a result, they either live from hand to mouth for years while servicing the loans, or end up bankrupt when they cannot pay,” she said.
Lawyer CR Chua said while financial education is good, most Malaysians do not qualify for a RM100,000 personal loan.
“Those who do are already high net worth individuals who probably know the system better than most of us,” he said.
He suggests that Bank Negara extend the module to all personal loan applicants, since those who end up in trouble are usually from lower income groups.
