PUTRAJAYA, Sept 11 — Civil service representatives today sought Prime Minister Datuk Seri Najib Razak’s intervention to undo Bank Negara Malaysia’s “drastic” move to shorten loan periods beginning July.
Representatives from the National Cooperative Force Malaysia Berhad (ANGKASA) and the Congress of Unions of Employees in the Public and Civil Services (CUEPACS) wanted the repayment period for personal loans to be extended to 15 years from 10.
“Surely this would have affected (civil servants) financially since they have to settle (the loans) quicker and in a larger amount,” ANGKASA president Datuk Abdul Fattah Abdullah told reporters after the meeting here.
“We support the government’s efforts to reduce household debt, but we suggest it shouldn’t have been done drastically and caused a major burden to lenders.”
The groups have described the meeting with Najib as “positive”, and they expected a decision to be announced either before or during Budget 2014 announcement in October.
“It would be a gift to the civil service and those with low wages,” he added.
Abdul Fattah was also unperturbed by the prevalence of personal loans among civil servants, claiming that Malaysia’s household debt-to-gross domestic product (GDP) ratio is still “not troubling” compared to Singapore and the US.
His remarks comes as BNM Governor Tan Sri Dr Zeti Akhtar Aziz insisted the same earlier today, saying that non-performing loans currently represent only two per cent in Malaysia’s household sector, while the majority of home loan borrowers are largely considered creditworthy.
In July, BNM had introduced three new measures to curb Malaysia’s rising household debt which included reducing the maximum tenure for personal loans to 10 years from 25, and 35 years for house loans. Offers for pre-approved personal loans have also been prohibited.
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