New 2012 Financial Guidelines by Bank Negara Malaysia

On the 18th November 2011, Bank Negara Malaysia (BNM) unveiled new financial guidelines to the financial institutions aimed at promoting prudent, responsible and transparent retail financing practices. The guidelines will take effect starting from 1st January 2012.
The guidelines would be applicable to home and vehicle financing, credit and charge cards, personal financing including overdraft facility and financing for the purchase of securities with an exception for share margin financing, which comes under stock exchange rules.
BNM requires all financial institutions to make assessments of a borrower’s ability to afford financing facilities based on a prudent debt service ratio.
The table below is the summary of the guidelines.

Items	Description	Effective Date
Car Loan	Maximum tenure capped at 9 years	18th Nov 2011
Debt Service Ratio	Capped at 60% for civil servants. Others, bank to determine	1st Jan 2012
	Calculated after tax and EPF statutory deductions. To consider all debt obligations.	1st Jan 2012
Early Loan Settlement	Banks will only be allowed to charge for the cost incurred in processing the loan and not for profit loss	July 2012
Financial Institutions Obligation	To provide consumers with information on total repayment amount and total interest cost & the impact of an increase in the financing rate	1st Jan 2012
Co-operative Banks	Cooperatives Commission will be imposing the similar requirements	1st Jan 2012