KUALA LUMPUR: Banks and related industries backed the move by Bank Negara in pushing for responsible financing to enhance consumer protection and reduce household debt.
“Banks will continue to engage closely with their customers by providing advice to ensure debt commitments are within their repayment capacities,” said Association of Banks Malaysia executive director Chuah Mei Lin.
She added that the new guidelines reflected the existing approach taken by its member banks.
The Federation of Malaysian Consumers Associations said the policy was a step in the right direction towards reducing household debt, but consumers needed to be more responsible in managing their finances.
“Too many young people are getting themselves deep in debt,” said its chief executive officer Datuk Paul Selvaraj.
He added that they usually accumulated the debts between the ages of 20 and 30.
National House Buyers Association secretary-general Chang Kim Loong said banks must evaluate an applicant’s true income more stringently before granting loans.
“Banks also should not be allowed to charge excessive fees for early termination,” said Chang.
Real Estate and Housing Developers Association of Malaysia president Datuk Michael Yam said he believed there would not be any untoward incidents with the new guidelines.
He said this was because people, especially those who took loans to buy property, knew how to self-regulate.
“This is based on the low percentage of non-performing loans,” said Yam.
He added that those possibly in danger of falling into debt were young people without family support.
Malaysian Automotive Association president Datuk Aishah Ahmad welcomed the guidelines but was concerned that if too stringent, the move would affect car sales.
“Checking on affordability is the right thing to do as there is still a lot vehicle repossession taking place because consumers purchase beyond their means,” she said.
SOURCE: The Star