BNM mandates financial education for high-value personal loans
Bank Negara Malaysia (BNM) has announced a revised policy requiring applicants for personal financing exceeding RM100,000 to complete a 15-minute financial education module. The policy, set to take effect on January 1, 2027, aims to improve financial literacy and ensure borrowers understand the commitments and risks associated with larger loan amounts.
What the change means for borrowers
The new rule applies specifically to personal loans above RM100,000. Applicants will be required to complete the short educational module as part of the loan application process. The content is designed to cover key topics such as loan terms, interest calculations, repayment schedules, total cost of credit, and the consequences of default. By enhancing financial literacy, BNM hopes to reduce the likelihood of over-indebtedness and promote responsible borrowing.
Why now?
Malaysia has seen growing demand for higher-value personal financing, driven by housing repairs, medical expenses, weddings, or consolidating existing debts. The training module is intended to provide borrowers with a clearer understanding of the financial commitments they are taking on and to encourage more informed decision-making before agreeing to large-loan terms.
What the module covers
The content area of the 15-minute program typically includes:
- Overview of loan products and eligibility
- How interest rates affect total repayment
- Repayment schedules and the impact of missed payments
- Fees, charges, and the true cost of credit
- Budgeting and cash-flow planning to accommodate loan repayments
- Consequences of defaults and potential credit impacts
Participants should expect a concise, user-friendly module that can be completed on a computer or mobile device, with assessments to ensure comprehension.
Implications for banks and lenders
Financial institutions offering high-value personal loans will incorporate the module into their digital or branch application processes. Lenders may use the completion status as part of eligibility checks, while still adhering to existing responsible lending guidelines. Banks will likely offer the module as part of a broader financial education initiative, reinforcing good customer outcomes and alignment with BNM’s consumer protection objectives.
Impact on consumers
For prospective borrowers, the policy means an extra step before approval for RM100,000+ loans. While some may view the 15 minutes as an inconvenience, the long-term benefit is a better grasp of how large debts fit into personal finances. For those who complete the module, it could translate into more informed negotiation of loan terms and potentially a lower risk of default.
Practical tips for applicants
To prepare, applicants should:
- Review all loan offers and compare total costs, not just monthly payments
- Assess personal budget and potential future expenses
- Ask about fees and early repayment options
- Try a quick online budgeting exercise before applying
While the module is mandatory for RM100,000-plus loans, consumers should stay mindful of their overall credit health and avoid taking on debt beyond what they can sustainably repay.
Next steps
BNM has not disclosed the exact content or the delivery platform for the module, but industry watchers expect lenders to provide access within the application interface. Borrowers planning to apply for large personal loans in 2027 should prepare by familiarizing themselves with basic credit concepts and reviewing their financial readiness ahead of the module deadline.
