TnG's GOPinjam: Bank Negara says it'll only interfere if harmful

 

Bank Negara Malaysia will not interfere in any retail financing products unless it detects unfair and harmful practices.

The central bank said this when asked on GOPinjam, the recently launched microcredit offering via the Touch 'n Go e-wallet, where interests can go up to 36 percent per annum.

Although Malaysiakini had sought a response from the BNM specifically about GOPinjam, its statement does not mention the product.

Instead, the central bank provided a general statement on the obligations of financial service providers and consumers.

"The bank would like to clarify that it does not intervene in the pricing of retail financing products, which are commercial decisions of the financial service providers (FSP).

"However, as part of its supervision of the business conduct of FSPs, the bank performs reviews of FSPs’ compliance with fair treatment requirements and will intervene if we detect any unfair practices or conduct which can cause significant harm to financial consumers," it said in the statement to Malaysiakini.

BNM added that it does not interfere so as to encourage competitiveness and innovation in the credit market, including by creating more products which are more accessible to the public.

"FSPs are encouraged to innovate and develop new products that can improve the accessibility of essential financial services that meet the varying and diverse needs of financial consumers, especially for those who are traditionally underserved by the formal financial system," it said.

However, the central bank also urged FSPs to conduct affordability assessments and observe prudent debt-service ratios.

"This serves as an important safeguard to protect consumers from the excessive debt burden and financial hardship.

"FSP must also implement adequate and effective controls for resolving and monitoring consumer complaints," it said.

It also advised consumers to ensure they can afford future repayments before taking on debt.

'Ah Long rates'

Earlier, the Federation of Malaysian Consumers Association (Fomca) raised concern over the newly-launched GOPinjam facility.

"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," Fomca operating officer Saravanan Thambirajah told 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.

In response, Touch 'n Go Group had said the interest rate for GOPinjam was comparable to other personal loan rates in the country.

"The interest rate for the digital personal loan ranges from eight percent and up to a maximum of 36 percent. We expect the average rate across our portfolio of borrowers to be comparable to other personal loan rates," it said in a statement to Malaysiakini.

However, a check on personal loans available in local banks showed that they provide an interest or profit rate that starts between five percent and eight percent, depending on the tenure and loan amount.

Some banks even cap the maximum interest rate at 15 percent. - Mkini