Review aggressive marketing for loans by banks, e-wallet firms, says MP

 

Khoo Poay Tiong says obtaining personal loans appears to be very easy. (Facebook pic)

PETALING JAYA: Government backbencher Khoo Poay Tiong (PH-Kota Melaka) has called on the finance ministry and Bank Negara Malaysia to review the actions of banks and e-wallet companies who are providing simple access for anyone to obtain personal loans.

During his debate on the amendment to the Insolvency Act today, Khoo said that based on the insolvency department’s statistics, 49% of bankrupt cases involved those who took up such personal loans, while 17% were due to business loans and 11% for hire-purchase loans on cars.

“It is clear that the main reason for bankruptcy is the failure to service personal loans, which is true in nearly half of all these cases.

Ads by Kiosked

“It is worrying. I request further explanation from the minister — what sort of personal loan is this?

“Does it refer to personal loans offered by commercial banks? We need to review this,” said Khoo.

He voiced his worry over the possibility that banks and e-wallet providers were aggressively marketing their personal loans to the detriment of the public.

The MP then shared his experience this morning when he received an email offering a RM20,000 loan to be serviced in 24 months.

“With only a few clicks on my handphone, I could have gotten a RM20,000 personal loan. It’s that easy,” said Khoo.

He also said that it was critical for Putrajaya to provide fiscal awareness lessons in schools and tertiary education institutions, seeing that there is a lack of financial knowledge among Malaysian youths, barring those who took up business or accounting courses.

Ads by Kiosked

Khoo shared his conversation with a recent graduate who is laden with credit card debts, saying that the youth was unaware that servicing the minimum amount will lead to greater financial trouble.

“Credit card companies say that you only need to pay the minimum amount to avoid late charges. So, this youth thought that by paying the minimum amount, he can avoid paying the rest of his credit card charges.

“He does not know that the rest of his debt will incur a very high annual interest rate of around 6-8%. Once the interest has been compounded, he may not be able to service his debt. This is why there are a lot of young bankrupts now,” said Khoo. - FMT