he Ministry of Housing and Local Government unveiled last week a new guideline that will allow for licensed moneylenders to provide loans digitally. Zuraida Kamaruddin Minister of Housing and Local Government said that these new guidelines were released with microentrepreneurs in mind, who are typically unable to secure loans from banks.
Eight operators were granted the first batch of approval to provide online loans, they include; Axiata Digital Capital Sdn Bhd, BigPay Later, Grabfin Operations (M) Sdn Bhd, GHL Payments Sdn Bhd, Presto Credit Sdn Bhd, JCL Credit Leasing Sdn Bhd, Fortune Tree Capital Sdn Bhd, and Hoop Fintech Sdn Bhd.
Minister Zuraida Kamaruddin anticipates that with the approval of these 8 players, more licensed moneylenders will come forward to seek approval to do the same. According to the minister currently, there are 4572 licensed moneylenders in Malaysia with the largest bulk of it coming from Sabah with roughly 1,600 operators followed by Selangor with 893.
Danny Leong, Group CEO, GHL Berhad, explained that the new guideline allows companies like his to fully digitise the process, compared to the previous guideline which required for borrowers to physically show up to sign the loan agreement at the registered premise of the lender, with CCTV recording, and face to face meeting with an attester.
Khairil Abdullah, CEO, Axiata Digital further adds that digital moneylenders can now use technologies like electronic signatures to provide access to financing to the underserved markets, he added that the actual licensing regime remains the same in that the licensed digital lender must offer the same protection of borrowers’ rights, such as interest rate limits, under the current law.
They both concur that the move to introduce this new guideline will significantly speed up the market’s ability to address the lending needs of the underserved. Khairil believes that this will have a two-fold effect, by making licensed moneylenders more accessible, he predicts that the demand for illegal and extortionate lending will also decrease.
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 licence.
As we are a digital company, this enables us to unlock the value of our moneylenders licence 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 fulfil 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.”
Similarly, 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.”