BNM Requires Financial Education for Personal Loans Above RM100,000

KUALA LUMPUR: Bank Negara Malaysia (BNM) announced on Wednesday that consumers applying for personal loans exceeding RM100,000 must complete a financial education module. The requirement is part of BNM’s updated personal financing policy, aimed at promoting responsible borrowing and prudent practices among both consumers and financial service providers.

Financial Education for Personal Loans

The central bank also capped the maximum repayment period for unsecured personal financing, including loans secured against property, at 10 years. It banned flat-rate interest calculations and Rule 78 methods, requiring lenders to clearly disclose effective interest or profit rates.

BNM highlighted concerns over rising household debt and the risk of consumers taking on loans they cannot afford. Financial institutions must conduct suitability and affordability assessments for all new or additional financing facilities. The rules take immediate effect and apply to licensed banks, Islamic banks, and designated development financial institutions.

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