CONSUMERS applying for personal loans exceeding RM100,000 must now attend and complete a financial education module, Bank Negara Malaysia (BNM) announced on Wednesday.
The new requirement is part of BNM's personal financing policy document, which introduces stricter conditions for lenders and borrowers.
The policy is designed to promote prudent and responsible practices among financial service providers while encouraging responsible borrowing behaviour among consumers.
BNM said the rules also clarify its expectation that the maximum repayment period for unsecured personal financing should not exceed 10 years, including loans secured against property for personal use.
The central bank has banned products that calculate interest or profit using flat-rate methods and Rule 78, a formula used to compute such charges.
Financial institutions must also clearly disclose the effective interest or profit rate to customers, reported Bernama.
With competition in the retail credit market intensifying, BNM said changes in lending practices have led to households taking on debt they cannot afford.
It warned that some new products may appear affordable but encourage exposing consumers to serious financial strain due to insufficient savings.
Financial service providers are now required to conduct suitability and affordability assessments for every new or additional financing facility.
The central bank said stronger safeguards are needed to address unhealthy developments in the personal financing segment.
The rules take immediate effect and apply to all licensed banks, licensed Islamic banks and designated development financial institutions. — October 1, 2025
