Free From Debts

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By S. SHAMALA

KOTA KINABALU: Around 10, 705 Malaysians have successfully freed themselves from the tangling web of debts worth RM437.4 million after enrolling in the Debt Management Programme (DMP) conducted by Bank Negara’s Counselling and Credit Management Agency (AKPK) as at June this year.

Currently, a total number of 155,147 individuals are enrolled in the DMP with Sabahans constituting 10 to 15 per cent of the number, the central bank’s Sabah regional head cum credit counsellor Idris Kasim told New Sabah Times in an exclusive interview.

Idris revealed AKPK, which is a wholly owned subsidiary of Bank Negara, received an average of 300 clients per month throughout Sabah, who sought advice and financial counselling provided by the agency.

The services are absolutely free of charge and comply with the PDPA (Personal Data Protection Act).

“The agency works as the middle person between the public and financial institutions, namely banks to strike a deal on restructuring their loans, whether secured or unsecured.

“Once the agency intervenes, the loans can be rescheduled to up to 10 years. Some can even be settled earlier,” Idris said, adding that discipline is the key element in clearing the debts.

He also said that the agency was able to request the banks to lower the interest rate of the loans, depending on the cases.

The AKPK, he added, would deal with each and every financial institution involved to come up with a comprehensive solution for the clients.

He recalled that a client, a taxi driver was debt-ridden when he approached AKPK.

“He had seven credit cards and was earning around RM3,000 monthly. However, the credit card payments take up more than half the amount of his earning.

“Therefore, we advised him to reschedule his payments and requested for lower interest rate. He was able to clear his outstanding within four years,” Idris said.

However, Idris admitted that there were certain criteria that individuals needed to fulfil to be eligible for the service offered by the agency.

“Firstly, they must not have been declared bankrupt. Secondly, if there are loans under advance litigation stage, whether the bank has proceeded with bankruptcy, garnish or seizure or the bank had proceeded for judgment, they are not eligible to be enrolled in the DMP.

“Thirdly, the individuals have to prove that they have some excess amount of money from their net income, called net disposable income, that can be used to settle the loans,” he said.

However, he said consideration would be given if clients were able to negotiate with the banks to withhold all legal proceedings.

Another pre-requirement for DMP is the financial institution that provided the loans must come under Bank Negara’s purview.

Currently, there is one full AKPK branch in the Bank Negara building in Kota Kinabalu and three counselling offices – one each in Sandakan, Tawau and Beaufort – operating in other bank premises.

“In Sandakan, we are at Maybank at Harbour Square, in Tawau we are using RHB Bank and in Beaufort, we are at Bank Simpanan Nasional,” Idris said.

“The office in Beaufort can be visited by those in Kuala Penyu and Labuan instead of travelling all the way to Kota Kinabalu. It is even visited by Sarawakians from Miri, Limbang and Lawas who find it nearer than Kuching office,” he added.

There are also plans to open branches in Ranau, Labuan, Keningau and Lahad Datu.

The agency was set up 10 years ago in view of the swelling number of non-performing loans in the country.

“Bank Negara’s objective is to inculcate the culture of prudential personal financial management besides trying to create a robust banking environment as the banking sector was facing loan recovery problems.

“The percentage of non-performing loans was increasing year by year, hence this agency was conceived to aid the public,” Idris said.

The core services offered by AKPK included financial education, counselling and the DMP.

“Financial education is more on creating awareness. We give about 10 to 15 financial talks every month all over Sabah.

“We have a few syllabuses to suit the different needs of different categories of people. For example, students of higher learning institutions, those who just enter the workforce as well as retirees,” Idris said, adding that a programme called POWER Programme was designed to equip individuals with essential financial knowledge and ability to make responsible financial decisions.

According to statistics provided by AKPK, 51 per cent had financial woes due to poor financial planning; failure or slowdown in business (15.2 per cent); high medical expenses (11.7 per cent); job loss or loss of breadwinners (9.6 per cent); struggling due to high cost of living (9.3 per cent) while 3.1 per cent due to other factors.