KUALA LUMPUR, July 5 — The Association of Islamic Banks in Malaysia (Aibim) has lauded the measures taken by Bank Negara Malaysia (BNM) to curb household debt and promote responsible financing and sustainable consumer credit growth.
The measures include a tenure limit of 10 years and 35 years on personal financing and house financing respectively, and prohibition of pre-approved personal financing products.
Aibim president Datuk Mohd Redza Shah said these measures indicate the central bank’s concern on household debt, at a time when the household debt to gross domestic product ratio has risen to 83 per cent from 70 per cent in 2009.
“It will put in check certain financing and lending practices of non-bank financial institutions which have extended credit to very long tenures,” he said in a statement today.
He added that providing personal financing beyond 10 years is imprudent and going beyond 35 years for house financing is unrealistic.
Mohd Redza also commended Islamic banks for their responsibility in providing financing, saying affordability is taken into account when an Islamic bank grants personal or house financing.
The measures, effective immediately, apply to all financial institutions regulated by Bank Negara Malaysia, credit cooperatives regulated by the Malaysian Cooperatve Commission, Malaysia Building Society Bhd and Aeon Credit Services (M) Bhd. – Bernama
