New 2012 Financial Guidelines by Bank Negara Malaysia


On the 18th November 2011, Bank Negara Malaysia (BNM) unveiled new financial guidelines to the financial institutions aimed at promoting prudent, responsible and transparent retail financing practices. The guidelines will take effect starting from 1st January 2012.

The guidelines would be applicable to home and vehicle financing, credit and charge cards, personal financing including overdraft facility and financing for the purchase of securities with an exception for share margin financing, which comes under stock exchange rules.

BNM requires all financial institutions to make assessments of a borrower’s ability to afford financing facilities based on a prudent debt service ratio.

The table below is the summary of the guidelines.

Items Description Effective Date
Car Loan Maximum tenure capped at 9 years 18th Nov 2011
Debt Service Ratio Capped at 60% for civil servants. Others, bank to determine 1st Jan 2012
Calculated after tax and EPF statutory deductions. To consider all debt obligations. 1st Jan 2012
Early Loan Settlement Banks will only be allowed to charge for the cost incurred in processing the loan and not for profit loss July 2012
Financial Institutions Obligation To provide consumers with information on total repayment amount and total interest cost & the impact of an increase in the financing rate 1st Jan 2012
Co-operative Banks Cooperatives Commission will be imposing the similar requirements 1st Jan 2012

Leave a Comment

  • MatPiza 20th November, 2011, 1:20 pm

    Hi 1 million,

    Agreed with BNM this time especially on Early Loan Settlement.. “Banks will only be allowed to charge for the cost incurred in processing the loan” – this has been charged by bank earlier prior loan approval, right?.. So meaning no charge at all after full settlement after july 2012?

  • SM 21st November, 2011, 12:45 pm

    later all banks will increase charges to cover profit loss.. lolz..

  • 21st November, 2011, 2:08 pm

    MatPiza, we don’t know yet but I think there will be a charge but should be smaller.

  • kingjoke 21st November, 2011, 6:48 pm

    support bnm move… i think for debt service ratio, the 60% cap should also be extended to private employees

  • shayna 24th November, 2011, 12:05 pm

    may i know where can i get the full guidelines???

  • tansri85 24th November, 2011, 1:39 pm

    The problem now all BNM’s previous measures are only on FIs under BNM…
    while others like MBSB etc is not subject to those measures.. Thats like giving more bisnes to those FIs..

  • AskChong 24th November, 2011, 6:18 pm

    Good to have this set of new rules before consumers super-over-borrowed.

    Latest report from government, over last 6 years, 100,000 Malaysia bankrupt and 25% of them due to car loan.

  • Leong Phoy Yan 17th October, 2012, 10:49 pm

    what is the difference between the previous lending guideline and responsible financing guideline?