Bank Negara Malaysia has issued a Policy Document on Personal Financing setting out new requirements for financial service providers to support prudent and responsible personal financing and to promote more responsible borrowing by consumers. A feedback statement to the exposure draft was published alongside the final policy document. The requirements include clearer reporting on Bank Negara Malaysia’s existing expectations on applying a maximum financing tenure of 10 years where personal financing is offered under a home financing product or is secured by an unencumbered property for personal use. The policy also prohibits offering personal financing where interest or profit charges are computed using a flat rate or the Rule of 78 method, reinforces expectations to disclose the effective interest or profit rate, and requires consumers applying for personal financing exceeding MYR 100,000 to attend and complete a financial education module. While the policy document is effective upon issuance, the provisions covering the maximum tenure application, the flat-rate and Rule of 78 prohibition, effective rate disclosure and the financial education requirement take effect on 1 January 2027.
Bank Negara Malaysia 2025-09-30
Bank Negara Malaysia issues personal financing rules covering 10-year tenure reporting, ban on flat-rate and Rule of 78 pricing and mandatory education above MYR 100,000
Bank Negara Malaysia's Policy Document on Personal Financing introduces new requirements for prudent lending and responsible borrowing. Key measures include a maximum financing tenure of 10 years for certain products, a prohibition on flat rate and Rule of 78 interest calculations, and mandatory financial education for loans over MYR 100,000. These provisions take effect on 1 January 2027.