KUALA LUMPUR (Oct 24): The Ministry of Local Government Development approves no more than 60 moneylending licence applications per year, in accordance with an approval quota set as a licensing control measure, said Minister Nga Kor Ming.

“The ministry imposes strict conditions and criteria for the approval of moneylending licences to ensure that only truly qualified companies are granted the licences,” he said in a written parliamentary reply on Tuesday.

According to Nga, among the listed criteria are the companies must be of Sdn Bhd or Bhd status; have their board members pass a Royal Malaysian Police screening; the board members are not declared bankrupt; the board members are free of any offences under the Malaysian Anti-Corruption Commission Act 2009 and the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001; and have a paid-up capital of at least RM2 million.

“In addition, the ministry has set an annual money lending approval quota of no more than 60 companies as a licensing control measure,” he said, noting that lending activities under the Moneylenders Act 1951 serve as an alternative option for access to loans apart from the banking sector.

Nga said this in response to a question posed by Dungun Member of Parliament Wan Hassan Mohd Ramli on the rationale behind the number of licensed moneylenders “running rampant”, and the efforts that are being undertaken by the ministry to help borrowers settle their debts, as well as to assist those allegedly being "hunted and threatened" by the lenders' agents.

Nga said pursuant to the Moneylenders Act, licensed moneylenders must not collect interest exceeding the principal amount; not charge compound interest; record every repayment made by the borrower with receipts issued; not hire agents; and not harass or threaten borrowers.

“Any dispute, including if the borrower fails to repay the loan, must be resolved through a civil claim only involving the two parties, namely the licensed moneylender and the borrower as per the agreement inked between both parties.

“If it is found that any licensed moneylender behaves like an ‘Ah Long’, such as charging interest rates above the permitted limit, using violence or threats against borrowers and carrying out activites that violate the provisions of the Act and related regulation, strict action will be taken.”

A violation of Section 29B of the Act (violence/threats to borrowers) could lead to the imposition of a fine of between RM50,000 and RM250,000 or three years’ jail, or both for a consecutive offence, according to Nga.

“Borrowers can file any complaints regarding violations to the act to the ministry via its Public Complaint Management System at https://kpkt.spab.gov.my for investigation and further legal action,” he added.

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