BNM Mandates Financial Education For People Borrowing RM100K+

Christina Chandra

1st October 2025 - 2 min read

Bank Negara Malaysia (BNM) has announced a new policy requiring consumers to get financial education before approval of personal loans that exceed RM100,000. The measure is set to come into force in 2027 and is part of a broader effort to promote responsible borrowing practices.

Promoting Better Financial Decisions

The financial training session is intended to help borrowers make wiser and well informed decisions about borrowing money. The course will be provided by either the lending banks or the Credit Counselling and Debt Management Agency (AKPK). In its policy document, BNM stated that lenders “may also encourage consumers who are assessed to be of higher risk to attend and complete a financial education module” before applying for new financing.

The central bank’s policy aims to reinforce the requirement for lenders to clearly disclose the effective interest rate to consumers. The initiative comes at a time of intense competition among lenders in Malaysia. New financing products may appear affordable but, as we repeatedly advise here at RinggitPlus, borrowing can lead to debt problems when people do not understand how to manage their money.

New Measures For Lenders

BNM states it has observed changes in the personal financing market that are contributing to unaffordable borrowing by households. To address some of these problems, the new policy document also prohibits the use of flat-rate interest and the Rule of 78 method for calculating interest on personal loans.

These methods are being phased out because they are considered unfair to borrowers, resulting in a larger portion of interest being paid in the early stages of a loan, which penalises those who try to settle their loans early.

The new measures, which apply to all licensed banks, Islamic banks, and development financial institutions, are considered necessary to prevent “unhealthy developments” in the personal financing segment, even though lenders are already required to conduct suitability and affordability assessments. The new policy from Bank Negara Malaysia is designed to empower Malaysians to manage their finances more effectively.

Do you believe the mandatory financial education course will help borrowers make better financial choices in the future? Share your views and join the conversation.

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