GEORGE TOWN: The government plans to introduce a new Act to regulate the growing number of loans offered by non-banking institutions, says Finance Minister II Datuk Seri Amir Hamzah Azizan.
He said the Act aims to regulate various lending schemes, including buy-now-pay-later (BNPL) services, and will streamline the ministry’s ability to monitor and address any issues arising from these activities.
“The Act is crucial because all finance-related supervision falls under Bank Negara Malaysia.
“It is essential that we address this issue, as in the current financial system, the regulator can only oversee banking-related activities, leaving non-banking lending largely unchecked.
“The Act is expected to be introduced next year in our efforts to address areas that may currently fall outside regulatory control,” he told reporters after his keynote address at the Affin Market Outlook Propelling Malaysia Forward Conference, Penang Series, at a hotel here yesterday.
He was responding to questions about regulations concerning non-banking entities offering loans, including ones under BNPL schemes.
The latter services, offered by various platforms and apps, allow retailers and businesses to provide their customers with instalment payment plans.
They typically split the cost of products into manageable, predetermined instalments, often marketed as interest-free, although fees may apply under certain conditions.
The Star had earlier reported that a live-in-the-moment mentality, paired with the convenience of easy credit and BNPL schemes, is one of the factors fuelling a rise in debt among adults aged below 30.
This follows the release of the latest report from the Credit Counselling and Debt Management Agency, which revealed that 53,000 young people are buried under RM1.9bil of debt.
The report also revealed that 28% of the nation’s working adults have turned to borrowing money for essential purchases.
Meanwhile, the Federation of Malaysian Consumers Associations (Fomca) has praised the move to regulate loans by non-banking institutions, including BNPL services, saying it is a crucial step toward promoting responsible spending.
“This is a move Fomca has been urging the government to make for the past three years,” said its chief executive officer Saravanan Thambirajah.
He said the rise of online shopping and BNPL schemes, especially post-pandemic, has heightened the need for such regulations.
BNPL services, such as those offered by shopping platforms, allow consumers to make purchases on credit with deferred payments, often without initial interest, he added.
However, Saravanan cautioned that this convenience can lead to overspending, creating a “debt culture” among consumers.
“Without regulation, BNPL can quickly become a serious issue, as many consumers see it as ‘easy money’ without understanding the potential risks,” he said.
This unawareness, he said, often results in consumers falling into a debt cycle marked by high late fees, interest hikes, and even bankruptcy.
Saravanan added that the new regulations will enforce responsible lending standards, transparency and safeguards to protect consumers.
“With these rules, consumers can enjoy flexible payment options while avoiding severe financial risks,” he said.
He added that Fomca believes the regulation will support responsible borrowing habits and foster a healthier financial environment in Malaysia.
