LICENSED moneylenders who charge interest above the permitted limit or demand repayments exceeding the original loan amount can face prosecution, the Ministry of Housing and Local Government (KPKT) has cautioned.
Deputy Minister Datuk Aiman Athirah Sabu said such actions are punishable under Section 17A of the Moneylenders Act 1951 (Act 400), which carries a fine of up to RM20,000, imprisonment for up to 18 months, or both.
“In addition, Section 23 of the Act prohibits licensed moneylenders from imposing charges on loan-related expenses, except for stamp duty and attestation fees stated in the prescribed agreement format,” she said during the Ministers’ Question Time in the Dewan Rakyat today.
Aiman Athirah stressed that licensed moneylenders are also barred from using oppressive or violent methods to recover debts.
“This is in line with Section 29B of Act 400, where offenders may be fined between RM50,000 and RM250,000, imprisoned for up to three years, or both.
“In the case of repeat or subsequent offences, caning shall be imposed as an additional punishment,” she said.
She was responding to a question from P. Prabakaran (PH–Batu) on measures to regulate licensed moneylenders and prevent the public from falling victim to excessive charges and repeated misconduct.
Expanding on the ministry’s regulatory framework, Aiman Athirah said mechanisms have been established under Subsection 17A(1) of Act 400 to control interest rates.
“For secured loans, the interest rate must not exceed 12 per cent per annum, or one per cent per month.
“For unsecured loans, it must not exceed 18 per cent per annum, or 1.5 per cent per month,” she explained.
She also advised members of the public to remain vigilant and informed about their rights as borrowers to avoid exploitation by irresponsible lenders. - November 5, 2025
