Bankrupts allowed loans backed by EPF collateral - Wan Saiful

 

Putrajaya has been urged to explain why purportedly bankrupt individuals were allowed a loan under the new Employees' Provident Fund (EPF) collateral scheme.

In a statement last night, Bersatu information chief Wan Saiful Wan Jan said he had met such individuals recently.

Based on screenshots of a banking app shown by Wan Saiful, some borrowers using the EPF Account 2 Support Facility (FSA2) scheme have borrowed much more than the maximum RM1,000 bank credit allowed by law.

Wan Saiful claimed these borrowers can access their borrowings once they furnish a discharge document from the Insolvency Department. Failure would allegedly result in the loan being cancelled despite the funds being deposited.

"How can there be a situation where a loan is approved and the funds deposited in their accounts, but the borrower is not allowed access to the funds?

"If they are not qualified (for a loan) because they are bankrupt, why was the loan approved? Not only was the loan approved, but the funds have also been deposited into their accounts," claimed Wan Saiful.

Putrajaya introduced FSA2 to help EPF members obtain personal financing from banking institutions. Only two banks provide FSA2 - MBSB and Bank Simpanan Nasional.

Borrowers can loan up to RM50,000 based on their EPF Account 2 balance and stretch the repayment period to 10 years. Interest will be charged between 4 percent to 5 percent, significantly lower than conventional rates (8 percent to 15 percent).

Meanwhile, Wan Saiful claimed that allowing bankrupt individuals to borrow money using their EPF as collateral will only add to their financial woes.

Citing the example of an individual who borrowed RM18,000 at a rate of 4.5 percent and a repayment period of nine years, Wan Saiful said the individual will have to pay nearly double by the end of the repayment period.

"I urge Prime Minister and Finance Minister Anwar Ibrahim to explain why his government is introducing chaotic policies that will cause the public to suffer.

"Never before has a prime minister on this planet provided a solution for bankrupt individuals by increasing their debt," said Wan Saiful.

He urged the government to abolish the FSA2 scheme and instead adopt his suggestion that targeted EPF withdrawals should be allowed by those in need.

Putrajaya has resisted suggestions for another round of EPF withdrawals that previous administrations introduced to deal with income losses during the height of the Covid-19 pandemic. - Mkini