Tuesday, 8 August, 2023 12:45 PM

What Is The Malaysia Consumer Credit Act & Why Does It Matter To You?
Alex Cheong Pui Yin
4th October 2022 - 12 min read
As consumers, you would definitely be familiar with credit cards, personal loans, hire purchase agreements (better known as v ehicle loans), and mortgages
(better known as home loans). These are also referred to as consumer credit.

However, the consumer credit market spans beyond just loans that you can apply from banks, and with the rise of fintech, new forms of credit lines have
emerged. Take for instance, the latest credit offering that has been gaining traction among consumers: buy -now-pay-later (BNPL) services, which became
popular during Covid-19 due to its easy approval process and flexibility, at a time when people needed urgent help with cash flow.

Given the growing diversity in the consumer credit landscape, Malaysia’s existing financial regulatory framework needed to be urgently updated so that it is
comprehensive enough to provide satisfactory protection to consumers. This is especially true for those who are vulnerable an d less financially savvy.

This is why the Consumer Credit Act (CCA) is extremely important to all Malaysians. First proposed by Bank Negara (BNM) back in 2017, the Act seeks to
protect consumers in their dealings with creditors and to promote healthy spending, and BNM is resuming its push for its enac tment, with the most recent
activity being the publication of its consultation paper (Part 1). In this article, we’ll dive into key details about the CCA, and share examples to demonstrate
why this Act is important – far beyond regulating BNPL players.

Malaysia’s consumer credit industry today

Currently, the regulatory framework for Malaysia’s consumer credit industry is quite fragmented, with different credit activi ties falling under the purview of
different ministries and legislations. Here’s a table to quickly summarise the existing legislations:

Legislations/Acts Ministry/Agency
– Hire Purchase Act 1967 Ministry of Trade and Consumer Affairs (KPDNHEP)
– Consumer Protection Act 1999 (including the Consumer Protection
(Credit Sale) Regulations 2017)
– Moneylenders Act 1951 Ministry of Housing and Local Government (KPKT)
– Pawnbrokers Act 1972
Cooperative Societies Act 1993 Administered by Malaysia Co-operative Societies Commission (SKM), under the Ministry of
Entrepreneur and Cooperatives Development (KUSKOP)
– Financial Services Act 2013 Administered by Bank Negara Malaysia (BNM), under the Ministry of Finance (MOF)
– Islamic Financial Services Act 2013
– Development Financial Institutions Act 2002
Capital Markets and Services Act 2007 Administered by Securities Commission Malaysia (SC), under the Ministry of Finance (MOF)
As you can expect, each legislation and ministry will have different standards and procedures, which ultimately leads to “une ven standards of protection” for
consumers when they obtain credit assistance from different providers of consumer credit.

Even more concerning is the fact that there are many non -bank entities offering credit facilities or related services these days – many of whom do not fall under
the purview of any ministries/agencies listed above. With the enactment of the CCA, it is hoped that these concerns will be addressed.

What is the Consumer Credit Act all about?

Malaysia’s drafting of the CCA is inspired by similar work that has been done in several other nations thus far to improve th eir consumer credit landscapes.
These include the United Kingdom’s Consumer Credit Act of 1974, as well as more recent ones, such as New Zealand (Credit Cont racts and Consumer
Finance Act 2003), South Africa (National Credit Act No. 34 of 2005), and Australia (National Consumer Credit Protection Act 2009).

Once enacted, the CCA is expected to pave the way for the “modernisation of the consumer credit regime in Malaysia”, protecti ng credit consumers from
unfair and deceptive market practices. Chief of all, it will allow for the establishment of a framework for entities that pro vide credit and credit services
(including non-bank entities), along with a consistent blueprint for credit consumer protection.

The CCA will also guide the collaborative efforts between all relevant ministries and agencies in enforcing the new standards and regulations. Ultimately, this
should lead to the development of an organised consumer credit landscape.

Driving these reforms under the CCA will be the new independent authority body dubbed the Consumer Credit Oversight Board (CC OB). There will also be a
separate Council for Consumer Credit Malaysia (CCC), which serves as a platform where the CCOB – as the key entity spearheading the effort – and existing
ministries or agencies can come together to coordinate efforts and discuss key areas of concerns.

(Image: The Star)

Meanwhile, in terms of timeline, the implementation of the CCA and the transformation of Malaysia’s consumer credit landscape is expected to take place
gradually in three phases:

Phase Approximate Phased implementation

s dates/Timeline
Phase Upon enactment of – CCOB to oversee all currently unregulated credit providers and credit service providers
1 CCA
– Existing ministries and agencies to continue regulating their respective sectors for now. However, CCOB may issue standards that can
be adopted and enforced by the ministries and agencies.

– Provisions to facilitate Islamic credit business by non-bank credit providers, such as ensuring that these businesses and their products
comply with shariah principles

– Existing licences/permits for moneylenders, pawnbrokers, and repossession of goods (under the Hire Purchase Act 1967) that were
issued under current legislations remain valid

– Hire Purchase Act 1967 to be updated for relevance

Phase By 2025 or after – KPDNHEP and KPKT to gradually transfer its consumer credit regulatory functions to the CCOB
2
– The Moneylenders Act 1951, the Pawnbrokers Act 1972, and provisions relating to credit sales transactions under the Consumer
Protection Act 1999 will be repealed

– CCA will be amended to support the repeal of the three legislations above
Phase After 2030 – Enhancements to the existing regulatory framework can be considered, including proposals drawn from the experience of “twin peaks”
3 approach* to financial regulation

* The “twin peaks” approach basically employs two regulators to safeguard the financial system: one responsible for prudential

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 * The “twin peaks” approach basically employs two regulators to safeguard the financial system: one responsible for prudential
and conduct regulation, while the other supervises financial services
A closer look at the CCA

Now that you’re aware of the general objectives behind the CCA, we’ll delve a little deeper into the nitty -gritty of the Act. Who does it actually protect, what
businesses does it cover, and what exact areas does it protect consumers against? Let’s find out.

1) Who does the CCA protect?

The CCA consultation paper (Part 1) was unambiguous in noting that it is “ not intended to protect all consumers”. Rather, it seeks to focus on those who are
“most vulnerable, less resilient, and lack bargaining power when dealing with credit providers”.

Under this distinction, the CCA will therefore cover not just individual consumers, but also micro as well as small and mediu m enterprises (SMEs and
MSMEs). Specifically, you will be protected by the CCA if you fall into any of these categories:

Categories Details
Individuals When you obtain, have obtained, or intend to obtain credit for personal, domestic, or household purposes (unlimited amount)
SMEs & MSMEs When you obtain, have obtained, or intend to obtain credit less than RM500,000
Guarantors When you act as a guarantor for individuals/businesses obtaining credit (in the two categories above)
Others Any other person or class that may be prescribed by the minister
2) Who will the CCA apply to?

Overall, the CCA will apply to any entities that serve as credit providers or credit service providers. Depending on which ca tegory your business falls into,
you’ll be required to either obtain a licence under the CCA when it comes into effect, or register your business.

Under Phase 1 of implementation, the CCA will concern these following entities:

Categories Definition/Distinction Businesses/Entities Form of regulation under

the CCA
Credit providers Entities/businesses that are directly providing credit to consumers – Buy-now-pay-later (BNPL) Licensing
– Factoring
– Leasing
Credit service – Typically third-party entities/businesses that are used by credit providers to – Impaired loan buyers Registration
providers perform servicing activities (ILB)
– Does not provide credit directly to consumers – Debt collection agencies
(DCA)
Under Phase 2 of implementation, these additional entities will also join the initial five businesses mentioned in the table above to fall under the purview of
the CCA:

• Conventional and Islamic moneylenders

• Pawnbrokers
• Non-bank hire purchase and credit sales companies
Meanwhile, credit providers serving customers who do not fall under the definition of “credit consumer” under the CCA are required to provide legal
acknowledgement to the CCOB. They must state that their business model does not include activities extended to credit consume rs as defined by the CCA.
Additionally, they must include a commitment to pursue authorisation from the CCOB if/when their circumstances change.

3) What areas does the CCA cover?

The CCA consultation paper noted that very frequently, credit consumer harm (as defined by the CCA) is caused by irresponsibl e or unethical practices on
the part of credit providers and credit service providers. Common examples of these include inadequate affordability assessme nts, use of complex and
ambiguous terms in credit contracts, and not displaying important terms or conditions prominently.

As such, the CCA has been designed to offer consumer protection in eight key areas, namely:

Credit consumer protection areas Objectives

Prohibited business conduct Credit providers should act fairly or ethically, and should not mislead and deceive consumers
Advertisement & solicitation – Promotional materials must be accurate, clear, and not misleading
– Crucial conditions and information must be prominently displayed
Credit agreement Adequate information is disclosed, and contract terms are fair
Financing charges Charges set must be reasonable and are transparent (e.g. consequences of late payments or defaults)
Credit assessment Be responsible in assessing credit consumers’ capability in taking credit
Debt collection and repossession of goods Provide adequate notices and avoid harassment or violence during debt recovery process
Financial hardship relief – Identify credit consumers who are genuinely facing financial hardships and are unable to meet financial obligations
– Provide such credit consumers with fair opportunity to restructure their credit agreements, or alternative solutions
Redress mechanism Set up an avenue for complaint management

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Case studies: The CCA in action
While it’s helpful to understand the technicalities that underpin the CCA, it’s even more critical for credit consumers to re cognise how the Act can protect
them in real-life situations. Knowing this, BNM has highlighted two scenarios in its consultation paper to demonstrate the CCA’s role; her e’s an abbreviated
version of the case studies for your reference:

Scenario The CCA’s role

Scenari Prior to the start of Covid-19, Kak Tini – who owns a home-based While BNPL can be a useful avenue for credit consumers to manage their short-term
o1 business selling assorted baked items – bought various baking cash flows, it also poses certain risks – including inculcating a false sense of
(Credit accessories through multiple BNPL providers. Paying interest-free affordability that may lead to future financial hardship.
consumer instalment in small amounts had made all her purchases seem
and cheaper. While the CCA does not prohibit credit consumers from using multiple BNPLs, there
BNPL) will be requirements on the BNPL providers to adopt responsible lending practices,
During the pandemic, however, Kak Tini’s business was badly affected, such as performing adequate assessments on its customers prior to offering a BNPL
and she now struggles to pay the mounting instalment bills. Kak Tini is facility. This way, BNPL providers will ensure that they are only extending their
also incurring late payment charges and processing fees. services to those who are able to repay.

Kak Tini admits that she is not digitally nor financially savvy, and in her The CCA will also set expectations for credit providers to handle credit consumer
haste for instant credit, she simply agreed to the terms set by BNPL complaints and disputes in a timely and effective manner.
providers. She is also unable to reach the BNPL providers despite calling
repeatedly, and is unsure how she can go about lodging a complaint or
seeking help.
Scenari Mr John, who owns a mechanic workshop, took on a loan of RM50,000 While BNM has put standards and regulations in place for banks to ensure fair and
o2 from a licensed credit provider to expand his workshop. However, flash professional conduct, DCAs are currently not regulated directly by any authorities.
(Intimidat floods damaged his workshop, and Mr John had to use his savings to
ing debt repair these damages. This consequently caused him to fall behind on Unregulated non-bank credit providers are also not subjected to similar obligations to
collector) his monthly repayments. ensure that their appointed DCAs treat customers fairly and respectfully.

Soon after, Mr John is approached by debt collectors from a debt The enactment of the CCA will put DCAs under the purview of the CCOB. As a
collection agency (DCA), appointed by the licensed credit provider to registered entity, DCAs will be required to adhere to ethical and professional
recover his debts. The initial meetings were cordial, with the debt standards of conduct in all their dealings. Otherwise, DCAs can be penalised for
collector patiently advising him. breaches of conduct obligations imposed on them.

However, when Mr John continued to miss repayments, the debt

collector began making harassing phone calls and leaving threatening
notices. The situation worsened when the debt collector started calling
Mr John’s elderly mother, forcing her to pawn her jewelleries and family
heirlooms to settle the debts.
As you can see, the enactment of the CCA is a pivotal step in strengthening the consumer credit protection framework in Malaysia. As an intelligent credit
consumer, knowing your rights – as provided under the CCA – will enable you to stand up for yourself and ensure that your interests are fairly and consistently
safeguarded.

***

The CCA consultation paper that has been made available thus far is only Part 1 of a more extensive document. Part 2 – which is expected to set out the
authorisation requirements and the standards of conduct of participants – is slated to be issued in the fourth quarter of 2022. Members of the public are also encouraged
to share their feedback on the matter.

From <https://ringgitplus.com/en/blog/loans/what-is-the-malaysia-consumer-credit-act-why-does-it-matter-to-you.html>

What Do Banks Really Look For In Your Loan Application?

Author Avatar
Desiree Nair
7th June 2023 - 4 min read

It’s never easy to get rejected when it comes to love or job applications, and loan applications are no different. You’ll be waiting, hoping, and praying that your loan
comes through and if it doesn’t, cue the crushing blows.

To reduce your chances of being a loan-reject, your application needs to be a solid one. But how exactly do banks measure your financial status? What do they look for
when it comes to approving loans? Here are the three main areas that prospective lenders will focus on when reviewing financing applications:

Annual Income and Type of Employment

The amount of money you earn in comparison to the debt you have indicates your loan repayment ability, but it is also tied to several areas of your employment. Thus,
your earnings are not the only point of contention as stability of income is also crucial to your application as well.

Therefore, even if you are making big money as a freelancer or a sole proprietor, when compared to a permanent employee with a fixed monthly salary, you’re likely to
appear as the higher-risk applicant. Don’t worry though – just like look for loans that welcome applicants by both salaried and self-employed employees, like the RHB
Easy-Pinjaman Express and Alliance Bank CashFirst Personal Loan.

In addition, the high status of the company you work for i.e. MNC or public-listed firm could help bolster your application, whereas a newly-incorporated sole
proprietor may not hold as much sway.

Savings and Other Assets

Having a healthy reserve in savings accounts and fixed deposits or owning other assets like property, stocks and bonds indicate that you have the means to repay your
prospective lenders.

Furthermore, if your accounts are tied with the bank you intend to borrow from, you might just have a leg up in securing a loan. Your application could be deemed as
less risky because of their ‘right to set off’ your dues from the savings accounts (and other assets) you hold with them.

Credit History
While this is an obvious one, you might not be familiar with the exact aspects of your credit history the banks are concerned with. Did you know that being blacklisted
by a utility company or leaving multiple savings accounts dormant could have an effect on your loan application?

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by a utility company or leaving multiple savings accounts dormant could have an effect on your loan application?

It certainly can and while these very common infractions may not even ring a bell to you, it could be listed by credit reporting agencies and raise red flags on your
report.

credit score
This is why it’s necessary view your credit report before making any loan application so you can clear off your remaining debt beforehand. All the same, you can also
take out a personal loan with the aim of consolidating all your previous debts – such as the Standard Chartered CashOne Debt Consolidation Plan – so it varies from
situation to situation.

Bonus Tip: Don’t know what your credit health is like? There are many ways for you to get a credit report or health check instantly and online!

Apart from these factors, banks may also look at a borrower’s status, as in their age, professional qualifications, titles held, community ties and the like.

More Things You Can Do To Get Your Loan Approved

Support your application with these handy tips:

1. Get a Guarantor
A parent or spouse with good credit standing can improve your application and perhaps even secure better loan terms. If you’re running your own business, try to get a
recommendation letter from reputable creditors who are willing to help you.

2. Choose Your Lenders Carefully

Apply to at least one bank with which you have a good relationship i.e. one that you have actively maintained an account with or promptly repaid any credit issued or
loan undertaken in the past. Not being a stranger can be beneficial especially if the prior conduct was positive. For example, you could even get better interest rates for
a Citibank Personal Loan if you have a credit card with Citibank.

3. Time Your Application

Avoid making numerous loan applications at the same time as it might indicate desperation for funds and could raise unwanted red flags on your credit report. If your
loan has been rejected by more than one bank, wait at least a year before you reapply. Also, good planning can give you time to gather assets and clear your credit
history before you start reapplying.

Best Balance Transfer Plans In Malaysia (July 2023)

Alex Cheong Pui Yin
13th July 2023 - 6 min read
(Article updated on 13 July 2023.)

Even during regular days, credit card balance transfer programmes are a good strategy to fall back on if you’re swamped with credit card debts that you can’t repay on time.
At interest charges of up to 18% p.a., outstanding balances for credit cards can quickly go out of control. This is even more so now that many of us face increased difficulty in
our repayments following the economic impact of the Covid-19 pandemic and movement control order (MCO).

Balance transfer plans as an alternative

On 25 March 2020, Bank Negara Malaysia (BNM) announced a few monetary measures to provide some relief for those facing financial constraints due to the current
economic climate. As part of this initiative, credit cardholders who are unable to meet the minimum monthly repayment for three consecutive months will have their
outstanding credit card balances automatically converted into three-year term loans or financing (initially applicable until 31 December 2020, but has been extended at the
bank’s discretion). However, you’ll be charged an effective interest of 13% p.a. during the tenure of your loan.

While the 13% p.a. interest rate for BNM’s auto balance conversion is lower than the usual 15% to 18% p.a. usually charged on your unpaid credit balances, most balance
transfer plans can offer you a much better rate. Like, much better – it is not uncommon for balance transfer packages in the market to entice newcomers with 0%-interest periods and
promotional interest rates. That said, you do need at least two credit cards to be able to do balance transfers.

Best balance transfer promotions in Malaysia

Affin Bank
(0% Balance Transfer)

Campaign period: 1 July to 31 Dec 2023

(Image: The Star)

Interest Rate Minimum Transfer Maximum Transfer Tenure Eligibility
– 0% p.a. RM2,000 – RM20,000 or 80% of available approved credit limit (for 0% p.a.) 12 months Existing cardmembers only

– 1% upfront interest – RM50,000 or 80% of available approved credit limit (for 1% upfront interest)
Bank Rakyat
(Pemindahan Baki Kad Kredit)

Campaign period: N/A

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Interest Rate Minimum Transfer Maximum Transfer Tenure Eligibility
– 3% p.a. for first three months, remaining months to be subjected to the lowest tier pricing of 13.5% p.a. N/A 100% of financing limits N/A All cardholders
HSBC Bank
(HSBC Balance Transfer Instalment at 0% Interest Rate)

Campaign period: N/A

Interest Rate Minimum Transfer Maximum Transfer Tenure Eligibility

0% p.a. RM1,000 Up to 80% of total available credit limit 3 months New-to-bank cardmembers only
Hong Leong Bank
(Hong Leong Balance Transfer Promo)

Campaign period: 1 to 15 July 2023

Interest Rate Minimum Transfer Maximum Transfer Tenure Eligibility

0% interest with one-time fee RM1,000 90% of available approved credit limit – 6 months All principal cardmembers
– 2.77% (6 months) – 12 months
– 3.77% (12 months)

Balance transfer with monthly interest

– 5.28% p.a. (12 months)
Maybank
(Balance Transfer 0% Interest, With 1% One-Time Upfront Fee)

Campaign period: 15 Mar to 15 Nov 2023

Interest Rate Minimum Transfer Maximum Transfer Tenure Eligibility

0% (but with 1% one-time upfront fee on approved amount) RM1,000 RM50,000 12 months Cardmembers who receive campaign invitation only
Public Bank
(0% PB Balance Transfer for New-To-Bank Cardmembers)

Campaign period: 26 June to 31 Aug 2023

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Interest Rate Minimum Transfer Maximum Transfer Tenure Eligibility
0% p.a. RM3,000 80% of available approved credit limit 6 months All principal cardmembers

Public Bank
(PB Balance Transfer)

Campaign period: 1 July to 31 Dec 2023

Interest Rate Minimum Transfer Maximum Transfer Tenure Eligibility

6 months RM1,000 80% of available approved credit limit – 6 months For principal credit card/credit card-i members
– 1% upfront interest
12 months – 12 months
– 2.5% upfront interest – 24 months
24 months – 36 months
– 4.5% upfront interest – 48 months
36 months
– 6.5% upfront interest
48 months
– 9.5% upfront interest
RHB Bank
(0% Interest Balance Transfer Plus)

Campaign period: 1 Jan to 31 Dec 2023

Interest Rate Minimum Transfer Maximum Transfer Tenure Eligibility

0% p.a. RM1,000 RM30,000, subject to available credit limit 12 months New-to-bank credit cardholders only

Non-promotional balance transfer programmes by banks in Malaysia

Aside from the promotions provided by the banks above, here is also a list of some of the better balance transfer plans that are currently available in the market:

Bank Interest Rate Minimum Transfer Maximum Transfer Tenure

Affin Bank One-time upfront interest – RM1,000 (6 and 12 Up to 90% of approved credit limit – 6 months
(Balance Transfer Installment Plan) – 2% (6 months) months) – 12 months
– 18 months
– 4% (12 months) – RM2,000 (18 and – 24 months
24 months) – 36 months
– 5% (18 months)
– RM3,000 (36
– 6% (24 months) months)

– 7% (36 months)
Alliance Bank – 0% p.a. (6 months) RM1,000 N/A – 6 months
(Balance Transfer 9.88 Programme) – 12 month

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(Balance Transfer 9.88 Programme) – 12 month
– 9.88% p.a. (12, 18, and 24 months) – 18 months
– 24 months
CIMB Plan A RM1,000 Up to 80% of credit limit Plan A
(Balance Transfer Programme) – 5.99% p.a. – 6 months
Plan B Plan B
– 7.99% p.a. – 12 months

Hong Leong Bank 6 months RM1,000 90% of available approved credit limit – 6 months
(One-Time Upfront Fee Balance Transfer – For both new – 3% (one-time fee for 6 months) – 12 months
and existing HLB credit cardholders) 12 months
– 5% (one-time fee for 12 months)
Hong Leong Bank 6 months RM1,000 Subject to available credit limit and – 6 months
(Balance Transfer Programme – Monthly Interest – for – 7.99% p.a. (offline rate) the bank’s discretion – 12 months
existing HLB credit cardholders only) – 6.99% p.a. (online rate)
12 months
– 8.99% p.a. (offline rate)
– 6.99% p.a. (online rate)
Hong Leong Bank 6.99% p.a. RM1,000 Subject to available credit limit and – 6 months
(Connect Exclusive Plan) the bank’s discretion – 12 months
For existing HLB credit cardholders who submit
applications through HLB Connect

Hong Leong Bank 4.99% p.a. (online and offline rate) RM1,000 Subject to available credit limit and No fixed
(Lifetime Balance Transfer Programme/Balance Transfer the bank’s discretion repayment period
Birthday Offer)
• For new HLB cardholders
• During the birthday month of existing HLB cardholders
HSBC 7.88% p.a. RM1,000 Subject to available approved credit – 6 months
(Balance Transfer Instalment) limit – 12 months
– 24 months
– 36 months
Maybank 6 months 6 months 6 months – 6 months
(Balance Transfer/Balance Transfer-i Plan) – 1.88% (upfront fee) + 0% p.a. (via – RM1,000 – RM50,000
Maybank2u only) 9 months 9 months – 9 months
9 months – RM1,000 – 90% of available credit limit
– 9% p.a. 12 months 12 months – 12 months
12 months – RM1,000 – RM50,000- 90% of available credit
– 3% (upfront fee) + 0% p.a. (if maximum 24 months limit – 24 months
transfer is RM50,000) – RM1,000 24 months – 36 months
– 12% p.a. (if maximum transfer is 90% of 36 months – 90% of available credit limit
available credit limit) – RM2,000 36 months
– 90% of available credit limit
24 months
– 4.5% p.a.
36 months
– 4.95% p.a.
OCBC – 2.88% (upfront interest for 6 months) RM1,000 80% of available approved credit limit – 6 months

(Balance Transfer) – 4.88% (upfront interest for 12 months) – 12 months

Standard Chartered 5.99% p.a. RM1,000 Subject to available credit limit and – 12 months
(Balance Transfer Plus) the bank’s discretion – 18 months
– 24 months
– 36 months

UOB Plan 25 RM1,000 – 80% of available approved credit Plan 25

(Balance Transfer Reducing Balance Programme) – 3% (upfront interest) limit – 6 months
Plan 26 Plan 26
– 4% (upfront interest) – 12 months
Plan 27 Plan 27
– 5% (upfront interest) – 18 months

UOB 6 months RM1,000 – 80% of available approved credit – 6 months

(Balance Transfer Fixed-Pay Programme) – 2.68% p.a. limit – 12 months
(upfront interest) – 18 months

12 months
– 3.68% p.a.
(upfront interest)

18 months
– 4.68% p.a. (upfront interest)
***

As you tap into the benefits of balance transfer programmes to help you repay your credit card debts, make sure to always exercise some financial responsibility. It is crucial
that you remain prompt with your monthly repayments, or you will still be hit with the standard credit card interest charge. Remember that balance transfers are not free
money, but helps you repay outstanding credit card debt.

URUS Financial Assistance Programme: What To Know Before Applying

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 URUS Financial Assistance Programme: What To Know Before Applying
Alex Cheong Pui Yin
16th November 2021 - 7 min read

The Financial Management and Resilience Programme (URUS) is now open for application to eligible individual banking customerswho fall under the bottom 50% (B50)
income group. Announced back in October 2021 by Prime Minister Datuk Seri Ismail Sabri Yaakob, the programme is intended as another form of assistance to borrowers
who are still struggling financially due to the Covid-19 pandemic. It is set to run for a total of three months from now until 31 January 2022.

With URUS now ready to assist Malaysians in need, here are some key details about URUS that you should know.

What is URUS?
URUS is described as a free “holistic assistance package” aimed at borrowers who are still facing prolonged cash flow difficulties due to Covid-19. The programme was
drawn up via a collaboration between the banking sector and the Credit Counselling and Debt Management Agency (AKPK), and offers aids such as personalised financial
plans as well as financial education programmes.

What assistances are offered under URUS?

Specifically, eligible borrowers will be able to tap into a personalised financial plan that helps them manage their debt repayment for a period of up to 24 months. The plan
may consist of any of the following repayment assistance:

• Interest/profit waiver for a period of 3 months

• Deferred payments, reduced instalments, or other viable options
• Development, education, and advisory support on how to manage your finances
Under URUS, your respective bank(s) and AKPK will draft a personalised financial plan after reviewing your case, taking into account your existing debt obligations, monthly
income, and living expenses.

Your enrolment into URUS may result in certain changes in the existing terms of your loans, such as an extension of the maturity date of your loan or financing – which, in
turn, could cause your overall borrowing/financing cost to increase. Your loan/financing balance will also be adjusted to reflect the interest/profit waiver.

Who is eligible for URUS?

B50 banking customers who wish to apply for the URUS programme must meet all the following eligibility criteria:

• Household income of up to RM5,880

• Loss of employment, or 50% income reduction
• Loan/financing is already under an existing repayment assistance programme as of 30 September 2021 (via any of the government’s stimulus packages or a bank’s
rescheduling and restructuring programme)
• Loan/financing is not in arrears exceeding 90 days as of the date of your URUS application

What loan/financing facilities are covered under URUS?

The various loan/financing facilities that are eligible for the URUS programme include:

• Housing loans/mortgages
• Personal loans and micro financing (including Amanah Saham Bumiputera (ASB) loan/financing, education loans, etc)
• Car loans
• Hire purchase*
• Credit card balances or other revolving credit lines (such as overdraft/cash lines and trade credit facilities) that were previously converted into term loan/financing
* While the list includes hire purchase as one of the facilities eligible for URUS, note that it will not be included as part of the personalised financial plan due to specific legal
requirements. Instead, the bank will contact you directly with details of your repayment terms.

How do I apply for URUS?

To apply for the programme, you will need to fill in a common URUS application form that can be found on the website of all participating banks. Required details include
basic personal information, as well as information about your employment and income status. You will also need to attach somesupporting documents to verify your
financial circumstances. All borrowers will need to submit any one of the following documents (although some banks may require more for verification):

• Latest Employees Provident Fund (EPF) statement

• Latest bank statement
• Latest income tax form
• Latest salary slip/payment vouchers
• Letter of termination from previous employer
If you are unable to provide any of the above documents, you can approach your bank to ask about other written records that can also be accepted as supporting
documents.

Aside from this, note that borrowers who have loans or financing with multiple banks do not need to make numerous URUS applications (one application for each
loan/financing). Instead, you are only required to make one URUS application with any one of your banks as the standardised application form will let you list out all your
performing loans with the different financial institutions (as you can see in the sample image below). You are encouraged to list out all of them – or as many as you can – as this
will allow AKPK to consolidate your details across banks and develop a more comprehensive repayment plan for you.

What happens after the submission of my URUS application?

Your bank will receive a confirmation message from your bank immediately after submitting your application. Following that, AKPK will contact you via email within 10
working days if you are eligible for the programme, providing you with your personalised financial plan. Upon approval, your new repayment terms under the personalised
financial plan will take effect from the following month onwards (AKPK will reconfirm this with you). Repayments must then bemade to your respective bank, not to the
APKP.

Meanwhile, if your application is not approved, you will be informed by your bank within five working days. You can then reach out to AKPK or available bank personnel for
alternative solutions.

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 alternative solutions.

Will my CCRIS be affected if I apply to URUS?

Loans that are under URUS will be identified in the borrower’s Central Credit Reference Information System (CCRIS) credit report. However, this identification is only
temporary as it is meant to facilitate the process for AKPK to follow up and monitor the borrower’s progress, as well as for the banks to provide any other necessary support.
It will be removed from your CCRIS report once you have completed the URUS programme, or six months from the date of your enrolment into URUS (at the earliest).

I am currently enrolled in other repayment assistance programme (under PEMULIH). What happens if I apply for URUS?
In general, URUS will supersede your existing repayment assistance programme. However, it is also possible to maintain your current repayment terms by making
adjustments for the three-month interest/profit waiver – provided you are eligible.

What are the other support offered via URUS aside from the personalised financial plan?
On top of the personalised financial plan, URUS also supports borrowers with various development, education, and advisory aidon how to manage their finances. They can
tap into AKPK’s financial education programmes for free, which cover topics such as goal setting, wealth management, and cashflow management.

There is also a collaborative effort by the name of Social Synergy Network, which enables borrowers to obtain a range of assistance from relevant agencies via referrals.
These referrals may yield aids such as employment opportunities, digital training and business platforms, as well as upskilling and reskilling courses.

(Image: The Star)

Applying to URUS via your respective bank
If you would like to find out more about URUS or are ready to apply for the programme via your respective bank, here are the landing pages for most of the major banks in
Malaysia:

• Affin Bank
• Agrobank
• Alliance Bank
• AmBank
• Bank Islam
• Bank Muamalat
• Bank Simpanan Nasional
• CIMB
• Hong Leong Bank
• HSBC Bank
• Maybank
• MBSB Bank
• OCBC Bank
• Public Bank
• RHB Bank
• Standard Chartered Bank
• UOB Bank
Again, do note that some banks may have stricter screening processes, so be sure to check your bank’s requirement list to ensure a smooth application process.

From <https://ringgitplus.com/en/blog/debt-management/urus-financial-assistance-programme-what-to-know-before-applying.html>

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