Licensed moneylenders have a part to play in pandemic too, says Zuraida

 

Licensed moneylenders were allowed to operate during the "total lockdown" period because they were necessary to prevent borrowers from going to loan sharks, said Housing and Local Government Minister Zuraida Kamaruddin.

In a recent interview with Malaysiakini, Zuraida said moneylenders - which her ministry rebranded as credit community firms in 2019 - were a regulated industry which provided protection for borrowers.

"If one wants to borrow, please borrow through the proper system instead of going to the illegal system where you may get yourself killed and your family threatened.

"But if you can't afford (the repayment), just don't borrow. You must borrow smartly and you must borrow with a conscience to protect yourself," she said in an interview with Malaysiakini and KiniTV recently.

Putrajaya's decision to allow money lenders to operate had drawn criticism, even from Umno president Ahmad Zahid Hamidi, who described the industry as non-essential.

However, Zuraida explained that moneylenders, which come under her ministry's purview, were part of the country's financial sector.

"I think these people are trying to just bad-mouth me because they are very jealous of me," said Zuraida in jest.

"(Sometimes the criticism) is not fair, it is just simply they want to criticise. I don't bother because I am not doing the wrong thing. You can say anything you like under the sun."

Avenue to seek redress

Zuraida said moneylenders were governed by the Moneylenders Act 1951, which offered customers an avenue to seek redress.

She explained that the industry was rebranded as 'credit community' firms to make the industry sound more friendly to suit their purpose.

"We want to encourage the people to go to the credit community instead of Ah Long (loan shark) when the small-time traders want to borrow an amount of RM300," she said.

"If you think you are unjustly treated, you can lodge a complaint and we can revoke the moneylender's licence."

The maximum interest rate for loans without collateral is fixed at 18 percent a year and 12 percent a year for loans with collateral, added Zuraida.

As of May 2021, she said there were 4,792 community credit companies in the country of which only half of them remained active during the lockdown period.

According to her, Bukit Aman had opened a total of 1,082 investigations involving Ah Long activities in 2020 alone and 434 cases in the first five months this year.

Meanwhile, Zuraida said the government could not compel such companies to implement a loan moratorium.

"The moratorium is on a voluntary basis from the operators; we cannot impose that, we can only advise them," she said.

"Last year, we talked to them and we advised them; the credit companies were willing to provide a three-month loan moratorium. This time, they are already familiar with it, so they may do so on a friendly basis with the borrowers," added Zuraida. - Mkini