From now on, Malaysians who want to borrow more than RM100,000 through a personal loan will first need to complete a financial education module.
This new requirement is part of Bank Negara Malaysia’s (BNM) recently published Policy Document on Personal Financing. The rules cover all licensed banks, Islamic banks, and selected development financial institutions.
Photo via The Edge Market
BNM explained that the policy is designed to improve responsible lending standards and to make sure borrowers fully understand the risks before committing to large debts. Alongside this, the central bank has also introduced several other measures:
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Loan tenure capped at 10 years for housing-related financing or loans secured by unencumbered property.
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Ban on flat interest rates and the Rule of 78, practices considered unfair and costly for borrowers.
These changes come at a time when bankruptcy figures in Malaysia remain worrying. Data from the Malaysia Department of Insolvency (MdI) shows that since its establishment, the department has managed 133,884 bankruptcy cases. Alarmingly, 31,387 of these were recorded between January 2020 and December 2024 alone.
When broken down by state, Selangor has the highest number of cases (23,352), followed by Johor (18,371), the Federal Territories (18,191), Penang (15,607), and Perak (9,500).
Looking at just the past five years, the trend continues with Selangor once again leading with 7,581 new bankruptcy cases, followed by:
The main trigger for these bankruptcies is personal loans. Since 2020, almost half of all cases (49.11% or 15,413 individuals) have fallen into insolvency because of unpaid personal financing. Business loans came next with 5,865 cases (18.69%), while vehicle purchase agreements accounted for 2,902 cases (9.25%).
These numbers underline why BNM is pushing for stricter safeguards to help prevent Malaysians from falling into financial distress due to unmanageable debt.
