By SUSAN TAM
KUALA LUMPUR: People who find themselves defaulting on loans
due to unexpected circumstances, or their debts spiralling out of
control, can seek help from Bank Negara.
So far, at least 500 people have done just that – they have sought
the services of the central bank’s Credit Counselling and Management
Agency (CCDMA) in the two months of its existence.
According to its chief executive officer Mohamed Akwal Sultan, the
agency had been approached by debtors with an array of problems.
An example was the man who was forced to default on his loans
because he had to use the money on treatment for his terminally ill
wife.
“Others found themselves in a difficult situation when they lost
their jobs. Some of the younger debtors who came to the agency for
assistance were floundering as a result of bad spending habits,” he
said in an interview yesterday.
He revealed that some individuals who had several credit cards
usually did not realise the consequences of uncontrolled spending
until their bills had run into thousands of ringgit.
He said what the agency provided was counselling and advice on debt
management.
It also customised solutions for debtors, which could involve debt
waivers and restructuring of loans, depending on the arrangement made
with the relevant financial institutions.
“As a mediator, the agency will advise the financial institutions
about the debtor’s situation and work with them to find the best
solution for repayment,” he said.
He also said that the agency would only work with financial
institutions that were regulated under the central bank.
The agency would assess the financial situation of the debtor and
arrange for the debtor to pay the financial institutions through the
agency.
“This is one way of ensuring that the restructuring process is done
smoothly,” he said.
However, if debtors could not comply with such arrangements, the
agency had the right to terminate its services, which was offered at
no fee, he added.
Mohamed Akwal said although Malaysia’s credit card usage was low
with eight million cards in circulation, and its debt low at RM16.7bil
up to March this year, the central bank initiated the agency as a
pre-emptive measure.
For debtors to qualify for the agency’s debt management programme,
they must have a source of recurring income to meet the payment
schedule. Also, they must not be under advanced legal action or be an
undischarged bankrupt.
Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz announced the
setting-up of the CCDMA last November, and it was officially launched
in April.
Out of the 500 people who have sought its counselling or financial
advice, some 200 applicants have been put under its debt management
programme.
The agency, which has more than 20 financial advisors, would double
its team next month as part of its expansion plan, said Mohamed Akwal.
He added that five regional offices would be opened next month to
provide debt management services in the central bank’s premises in
Penang, Kuala Terengganu, Johor Baru, Kota Kinabalu and Kuching.
Other plans in the pipeline included financial education for
specific target groups such as students, professionals or housewives
through roadshows, seminars or special sessions.