Money lending is not a new concept, but online money lending may be. A moneylender is a person or entity that provides small loans at a specified interest rate (which may be exorbitant), usually to individuals who are unable to obtain traditional bank loans.
Although the local term 'aaron' is commonly associated with illegal moneylenders, there are also legal moneylenders licensed by the Malaysian Ministry of Housing and Local Government (KPKT).
legal framework
Money lending in Malaysia is regulated by the Money Lending Act 1951 (MLA), which defines who is a money lender and stipulates licensing requirements. Approved lenders can only charge a simple interest rate of 12% to 18% per annum, depending on whether the loan is secured or unsecured.
The MLA focuses on regulating non-bank money lenders, protecting the public from unscrupulous money lenders who charge exorbitant interest rates or use unethical methods to recover loans. Therefore, moneylenders who provide loans with interest must obtain a license under the MLA, and if they fail to comply, KPKT may revoke their license and impose a fine or, if found guilty by a court of law. You may be sentenced to imprisonment.
Before the introduction of the Online Lending (Community Credit) Guidelines (New Guidelines) by Garis Panduan Pemberian Pinjaman Wang Dalam Talian (Kredit Komuniti), or informally KPKT:
a) Clause 15 of the Money Lenders (Administration and Licensing) Rules, 2003 provides that the money lending process requires a physical meeting at the registered address of the money lender.
The new guidelines stipulate that loan agreements can now be concluded online.
b) MLA licenses issued before May 13, 2021 did not include the provision of online loans.
Although the new guidelines allow licensed money lenders to apply to KPKT to provide loans online, the laws governing the money lending industry remain unchanged and apply to licensed online money lenders as well. Applies.
Digital lending business and financial inclusion
Digital money lending products are experiencing remarkable growth in Malaysia. Examples of digital personal loan products include SLoan, offered by SeaMoney Capital Malaysia Sdn Bhd (SLoan), and BigPay Later, offered by AirAsia Group.
The goal of such products is to promote financial inclusion by providing people of all economic backgrounds with equal access to a variety of financial products and services. For example, digital loans are popular among ordinary people because, unlike traditional loans, they have access to online lending platforms that eliminate requirements such as having a bank account, higher credit history, and more stringent customer verification processes. Provides more accessible options.
Some digital loans specifically target underserved communities to obtain capital, improve short-term cash flow situations, and expand businesses. For example, SLoan offers eligible sellers a financing facility of up to RM120,000 with an annual interest rate of 18%, providing financial assistance as they grow their business.
Of course, every coin has two sides. While digital lending platforms can promote financial inclusion, their prevalence has raised concerns about non-performing loans as borrowers can easily access such loans and expose themselves to risks such as uninformed decision-making and over-borrowing. I am. As a result, borrowers may end up taking on more debt than they can afford and dealing with fines and negative effects on their credit scores.
Borrowers should exercise caution before applying and consider their personal needs and means and their ability to repay and repay such loans.
conclusion
The rise of e-money and e-commerce highlights the need for greater care and regulation, especially when it comes to online lending. Despite the rapid growth in online trading, money lending, digital financial services and commerce, legal frameworks have not kept pace and existing Regulatory gaps need to be filled.
When engaging in digital money lending transactions, lenders and borrowers should obtain independent legal advice to ensure compliance with licensing requirements under the MLA, new guidelines, and related regulations. Failure to comply may result in legal penalties. Borrowers should focus on learning about the lender's credibility and understanding the terms of the loan agreement before proceeding.
This article was contributed by Lai Yong Ze of Christopher & Lee Ong.
