The Federation of Malaysian Consumers Associations (Fomca) has raised concerns over a newly launched digital personal loan service by the Touch 'n Go Group, which is charging high-interest rates that range from 8 to 36 percent per annum to the borrowers.
Fomca chief operating officer Saravanan Thambirajah urged Bank Negara Malaysia (BNM) to intervene and ensure that there are sufficient safeguards for microlending service GOPinjam, which is accessible through the Touch 'n Go eWallet.
"BNM needs to intervene to check this GOPinjam by Touch 'n Go and CIMB. Looks like Ah Long or unlicensed loan shark services via a digital platform," Saravanan said in a text message to Malaysiakini.
"This is equivalent to a licensed Ah Long. The interest is at a cutthroat rate and misleading. The consumers are going to end up paying more if they missed out on the payments," he claimed.
He urged consumers and the public to avoid seeking a loan with the GOPinjam scheme at this juncture.
"We are afraid that youths would fall for this scheme due to their lavish lifestyle. Probably they don't understand the consequences of taking this type of loan.
"With the pandemic and flood disaster, many people are facing financial distress. We hope that banks would not take the opportunity to make money from this situation," Saravanan said.
‘Living tomorrow today’
Meanwhile, the Consumers Association of Penang (CAP) said it was shocked by the announcement of the digital personal loan service.
"Such a move promotes a debt dependency culture to Malaysians by ‘living tomorrow today’," CAP said in a text message.
"Although a debtor cannot be made bankrupt if he owes less than RM100,000, there are many Malaysians who are already unable to pay their debts. Malaysians are already known to be poor when it comes to financial literacy and giving them easy access to personal loans is not helping them.
"It was reported that Malaysia recorded 11,207 new bankruptcy cases between March 2020 and September 2021 and introducing such personal loans is going to exacerbate the situation," CAP added.
Micro-lending service
Launched on April 1, the micro-lending service jointly developed with CIMB Bank Berhad offers personal loans from as low as RM100 to a maximum of RM10,000 with an interest rate that varies from eight to 36 percent per annum.
The repayment period for these loans can range from one week to one year, with no hidden fees for early settlement charges.
To further promote inclusion and accessibility to as many people as possible, potential borrowers will require a minimum monthly income of only RM800 to gain access to GOpinjam.
Bernama reported that the Touch 'n Go (TnG) Group was looking to disburse up to RM300 million this year through GOpinjam, which is targeted at the underserved and lower-income market segment.
The loan will be financed under the e-Zi Tunai personal loan product under CIMB.
There are more than 60 million users for TnG eWallet, with over five million transactions with the group monthly.
Malaysiakini has contacted Bank Negara, Touch 'n Go and CIMB for further comments on the matter. - Mkini
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