Evaluating Responsible Lending Framework Through Suitability and Affordability Assessment in Malaysia

Rafie, Nurul Afifah Adawiyah; Ilias, Ibtisam @ Ilyana

doi:10.6007/ijarbss/v12-i6/12164

Cited by 1 publication

(2 citation statements)

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“…The primary emphasis is placed on verifying customers' capacity to fulfil their payment obligations within the agreed-upon timeframe. Rafie & Ilias (2022) assessed the Malaysian consumer credit industry's current responsible lending policy which includes banking, pawnbroking, hire-purchase, moneylending, credit sale, and cooperatives, as industries are regulated separately. The applicable laws which were scrutinised included the Financial Services Act 2013 (FSA), the Moneylenders Act 1951, the Pawnbrokers Act 1972, the Hire Purchase Act 1967, the Consumer Protection (Credit Sale) Regulations Act 2017, the Cooperative Society Commission Act 1993, the GRF and the Guidelines on Credit Facility for Cooperatives.…”

Section: Suitability and Affordability Assessmentmentioning

confidence: 99%

“…This fragmented approach exposes another loophole that allows those who are rejected by the banks for example to apply for loans from other non-banks that may or may not evaluate the affordability of their prospective borrowers. This situation arises from the lack of legal requirements for non-bank lenders to conduct such assessments (Rafie & Ilias, 2022). It is submitted that this shortcoming will defeat the objective of preventing over-indebtedness.…”

Section: A Comparative Analysismentioning

confidence: 99%

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Protection Against Over-Indebtedness: Appraising Suitability and Affordability Assessment in Malaysia and South Africa

Ilias,

Hassan,

Abu Bakar

et al. 2023

MAJCAFE

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This study analyses mandatory suitability and affordability assessment embodied in the Guidelines on Responsible Financing issued by the Central Bank of Malaysia, focusing on conventional banks, Islamic banks and prescribed development financial institutions. It employed a doctrinal legal research methodology whereby relevant primary and secondary sources of law were meticulously analysed. This study also employed comparative legal research methodology whereby the approach adopted in South Africa was scrutinised and compared against the practice in Malaysia. This study found that the Guidelines on Responsible Financing play an essential role in ensuring responsible lending among the banks, Islamic banks, and prescribed development financial institutions in Malaysia. Based on the analysis conducted, several recommendations were proposed to bolster the existing regulatory approach in imposing suitability and affordability assessment. The outcome of this study is imperative in reducing the situation of over-indebtedness among Malaysians and reinforcing the responsible lending regime in Malaysia.

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Section: Suitability and Affordability Assessmentmentioning

confidence: 99%

Section: A Comparative Analysismentioning

confidence: 99%