The Malaysian Ministry of Housing and Local Government (Malay: Kementerian Perumahan dan Kerajaan Tempatan, abbreviated KPKT) revealed a brand-new set of guidelines last week encouraging licensed moneylenders to offer loans digitally.
Zuraida Kamaruddin, Minister of Housing and Local Government, Malaysia, mentioned that the new guidelines were introduced keeping microentrepreneurs in mind, who most often are unable to get loans from banks.
In the process, the Malaysian Ministry of Housing and Local Government granted the first batch of approval to eight operators to offer online loans. The names include Grabfin Operations (M) Sdn Bhd, JCL Credit Leasing Sdn Bhd, Fortune Tree Capital Sdn Bhd, Axiata Digital Capital Sdn Bhd, Presto Credit Sdn Bhd, GHL Payments Sdn Bhd, Hoop Fintech Sdn Bhd, and BigPay Later.
Minister Zuraida Kamaruddin foresees the approval of the above mentioned eight players, and more licensed moneylenders are expected to gain approval in the coming time.
As per the minister, there are about 4,572 licensed moneylenders in Malaysia at present. And the maximum of them is from Sabah with approximately 1,600 operators followed by Selangor at 893.
GHL Berhad Group CEO Danny Leong expresses that the new set of guidelines enable companies like his to digitize the process completely. In contrast, the old guidelines demanded borrowers to physically be present to sign the loan agreement at the lender’s registered office along with CCTV recording and a one-on-one meeting with an attester.
Khairil Abdullah, CEO, Axiata Digital, further adds that digital moneylenders now have the liberty to deploy technologies such as electronic signatures to provide access to financing to the underserved markets. He also said that the actual licensing routine remains unchanged where the licensed digital lender needs to offer the same protection to the borrower’s rights viz., interest rate limits as per the current law.
They both (Danny Leong and Khairil Abdullah) agree that the step toward introducing the new guidelines will noticeably expedite the market’s ability to address the lending need of the underserved. Khairil also believes that this move will have a double effect, making licensed moneylenders more accessible. With this, he expects the demand for illicit extortionate lending to decline.
Commenting on how this will affect Axiata Digital’s lending business, Khairil said, “This is a very welcome development and forward-looking move by the Ministry that will enable Aspirasi to scale its service offerings under its existing license.
As we are a digital company, this enables us to unlock the value of our moneylenders license that we have held since 2019. In addition to our existing products, Aspirasi’s customers will now have the option to borrow under the regulated regime offered by the Moneylenders Act 1951 and the new Guideline.
At Aspirasi, assisting underserved MSMEs to fulfill their business goals is at the core of our business. We believe that with the right support and by embracing technology, they can make financial progress personally, professionally and in service of others, and become a part of the digital economy.”
On similar grounds, Danny Leong commented,
“This would help GHL to grow our micro-lending business much faster and at a lower cost. This reduction in cost could then be transferred to borrowers through lower interest rates as well as smaller lending amounts, hence serving the SME, MSME and the B40 segments.”