KUALA LUMPUR (Feb 27): The government has no intention of increasing the limit of interest rates for credit community loan facilities or loans from non-bank licensed money lenders.

Speaking at the Dewan Rakyat on Monday (Feb 27), Local Government Development Minister Nga Kor Ming said the rates that can be charged for such entities in Malaysia are now one of the lowest in the region.

The current non-bank interest rates stand at 12% for mortgage loans and 18% for non-mortgage loans.

“Our government does not intend to increase the rates; this is to protect consumers and licensed business operators,” Nga said in response to a supplementary question from Datuk Mohd Shahar Abdullah (BN-Paya Besar) during ministers’ question time.

Nga outlined that interest rates in Hong Kong are between 24% and 60%, whereas there is no ceiling in the Philippines as it is on a “willing borrower, willing lender” basis.

He also said that interest rate in Singapore is 20%, while in India, it is 21%; it is a whopping 47% in Australia.

Mohd Shahar was asking the ministry about what measures it was taking to protect consumers, especially youths, who are forced to take loans.

He said the government is still in the process of drafting the Consumer Credit Act (CCA), led by the finance ministry and the Securities Commission Malaysia, and that it will be among the government’s top efforts in protecting consumers.

The CCA, when enacted, will seek to establish an authorisation framework for non-bank entities carrying on the business of providing credit and credit facilities. It will also aim to provide a comprehensive and consistent framework for consumer credit protection and to establish an effective surveillance, supervision and enforcement framework to deter and reprimand unfair, unethical and predatory practices.

Nga said the finance ministry, which is drafting the Act, will also take into account syariah-compliant financing and Islamic pawn-broking by the non-banking industry.

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