Debt Service Ratio


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.

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