Starting in 2027, anyone looking to take out a personal loan of more than RM100,000 will need to sit through a financial education module before getting the green light.
Financial module required for those applying for personal loan
According to a new policy document released by Bank Negara Malaysia (BNM) on 30 September, the module will be conducted either by the bank itself or by the Credit Counselling and Debt Management Agency (AKPK).
The idea is simple: to make sure borrowers understand what they’re signing up for and to encourage more responsible borrowing habits.
BNM also pointed out that banks can recommend the module even for smaller loan applications if a customer is considered high-risk, such as someone with little financial literacy or minimal experience in handling financial services.
Transparency is key
On top of that, the central bank wants lenders to be more upfront about costs. The new guidelines spell out stricter requirements for banks to clearly disclose the effective interest rates charged on personal financing products.
Image credits: Central banking
These changes are part of BNM’s wider push for more prudent lending practices, especially as competition in the personal financing space heats up. Malaysia’s personal loan market, serving a population of 32 million, currently has over 30 local and foreign banks fighting for customers.
BNM warned that some new financial products in the market, while seemingly affordable, actually encourage people to take on too much debt, leaving them vulnerable if they don’t have enough savings or financial buffers.
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