Bank Negara: The number of bankruptcies down
PETALING JAYA: The issue of bankruptcy is often presented as synonymous with circumstances related to deteriorating finances, says Bank Negara Governor Tan Sri Nor Shamsiah Mohd Yunus.
The governor was reacting to the recent statement by the Malaysian Consumer and Borrower Solutions Association linking the increase in the overnight rate or OPR to the trend of bankruptcy.
The governor said in a statement yesterday that, when viewed in terms of trends and updates from certain banks and non-banking institutions (hire-purchase service providers), the trend of bankruptcy cases for individuals has been declining since 2016.
This includes when the OPR increased in 2018.
The number of young people (individuals under the age of 35) in bankruptcy also showed a similar downward trend, representing 14% of the total number of bankruptcies between January and May 2022 (average 2017-2019: 24.9%).
Declaring someone bankrupt is not an easy thing. Many procedures must be followed by financial institutions or other creditors, Nor Shamsiah said.
Bankruptcy action is the last resort for financial institutions, after all other efforts have been made to recover loans from borrowers, she explained.
In accordance with the Principles for the Fair Treatment of Financial Consumers and Responsible Finance Practices issued by Bank Negara, financial institutions are required to ensure that borrowers experiencing difficulty repaying their loans are treated fairly and given due consideration before any action is taken. bankrupt.
She advised borrowers who are having difficulty repaying their loan to contact the relevant financial institution before the loan becomes a non-performing loan to avoid filing for bankruptcy.
This allows financial institutions to offer the borrower an appropriate loan repayment package to help them in the event of financial hardship.
Bank Negara also found that borrowers gradually withdrew from the loan repayment assistance program, and the banking system’s loan repayment trends also recorded an improvement in the first quarter of 2022, where this trend increased to reach in average 92% of pre-pandemic loan repayment level (first quarter 2020).
Borrowers can also seek advice from the Credit Counseling and Debt Management Agency or AKPK to be considered under the Credit Management Scheme or PPK.
This program can help them restructure existing loans, etc., allowing the borrower to continue repaying their loans.
This can prevent legal action such as bankruptcy or real estate auctions from being taken against them if the borrower fails to repay the loan.
Since its inception in 2006, AKPK has provided counseling services to 1.2 million borrowers.
Of this number, 360,095 borrowers were assisted under the PPK.
For any other questions or to obtain AKPK services, the public can browse the AKPK website at www.akpk.org.my or make an appointment via https://services.akpk. org.my/MY/.
Nor Shamsiah added that Bank Negara has also worked closely with other partners and agencies through the Financial Education Network to intensify efforts to increase financial literacy among individuals so they can make financial decisions. on the basis of sufficient information while promoting a responsible borrowing attitude.
This is very important to further strengthen the sound financial system and maintain credit flows to the economy, she said.
In addition to financial institutions, bankruptcy actions are also being taken by other creditors outside Bank Negara’s jurisdiction, such as creditors and suppliers, she said.
In this regard, relevant ministries and agencies are actively working to ensure that the borrower/debtor receives fair and responsible treatment through the enactment of the Consumer Credit Act or AKP and the establishment of a Consumer Credit Supervisory Board under the Department of Finance, and the establishment of uniform standards and guidelines for fair service principles in consumer credit and responsible financing practices.