Friday, 13 September 2013

Bank Negara Malaysia will not review repayment period

Bank Negara Malaysia will not review repayment period
KUALA LUMPUR: Bank Negara Malaysia will not review its 10-year repayment period for personal loans as suggested by certain quarters.

Governor Tan Sri Dr Zeti Akhtar Aziz was responding to appeals by Congress of Unions of Employees in the Public and Civil Services (Cuepacs) and the National Cooperative Organisation of Malaysia’s (Angkasa) to consider reviewing Bank Negara’s 10-year repayment period.

“In the world, 10 years for a personal loan (to be repaid) is the highest. It is usually about six years in other countries,” Zeti said on sidelines of the 5th Annual Global Policy Forum by the Alliance for Financial Inclusion (AFI).

Prime Minister Datuk Seri Najib Tun Razak graced the closing ceremony of the forum.

“When a person borrows to either pay for a television or a wedding, that is squandered within a few days,” she said, “(If the repayment period is longer) he or she will then have the misery of owning that loan for 15, 20 or 25 years for what they spent in a few days.”

Zeti pointed out that personal loans are different from housing loans, where applicants eventually own an asset after repaying the loan.

Both Cuepacs and Angkasa opined that the repayment cap should be extended to 15 years.

On higher inflation as a result from higher fuel costs, Zeti said there was no such scenario currently.

“We do not see that happening because the global economy is still having a very modest growth and certainly from the demand side, it is not going to precipitate higher prices,” she said, adding that any Government that tried to contain price increases through subsidies would experience a financial burden that is not sustainable.
“However, if there is a disruption in supply due to events that is beyond anyone’s control, then of course it could cause prices to go up throughout the world,” she said.

The forum ended with AFI declaring the Sasana Accord to help people in developing countries to have some form of financial services.
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