12th July 2022 - 2 min read
The Malaysian Association of Borrowers and Consumers Solution (4PM) has cautioned that as many as 32,000 borrowers may go bankrupt over the next two years if Bank Negara Malaysia (BNM) continues to increase the overnight policy rate (OPR). This will be a 70% jump from the current bankruptcy cases reported in the country.
“From the movement control order (MCO) until now, more than 46,000 people have been declared bankrupt because they were unable to repay their bank loans,” said the president of 4PM, Rosland Mohd Arif, adding that further interest rate hikes will force borrowers to allocate more money for their loan repayments, including car, personal, and housing loans. This will also cause borrowers as young as 25 years old to go bankrupt as they may not be able to meet their financial obligations.
“Some (of the borrowers) had come under mental stress and had even been driven towards suicide. That should be sufficient to show that many people are not ready for an increase in debt interest rates,” Rosland further remarked.
Last week, BNM had raised the OPR by another 25 basis points, bringing it from 2.00% to 2.25%. It is the second OPR increase in 2022, after the first one in May, which saw the rate being raised from its record low of 1.75%. Several research and financial institutions also expect BNM to gradually increase the OPR to 3.00% by 2023.
Meanwhile, Prime Minister Datuk Seri Ismail Sabri Yaakob had stated that the government may once again review the country’s bankruptcy threshold, as it had done back in 2020. This is due to a worrying increase in bankruptcy cases that has been reported in the country recently, especially among youths.
(Source: Free Malaysia Today)
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