Bank Negara Malaysia issues Exposure Drafts of Four Policy Documents
24 December 2024
Bank Negara Malaysia (“BNM”) is seeking feedback on the exposure drafts of four policy documents issued recently, namely:
- Policy Document on Large Exposures Limit;
- Policy Document on Personal Financing;
- Policy Document on Technology Requirement for Payment Services Regulatees; and
- Policy Document on Prudent and Professional Conduct of Insurance and Takaful Brokers.
Exposure Draft on Large Exposures Limit
This exposure draft sets out the proposed regulatory requirements and guidance on the large exposures limit applied to a single counterparty and its group of connected persons.
The policy document, when issued, will:
- apply to:
- Licensed banks;
- Licensed Islamic banks;
- Licensed investment banks;
- Financial holding companies; and
- Bank Kerjasama Rakyat Malaysia Berhad;
- supersede the Policy Document on Single Counterparty Exposure Limit and the Policy Document on Single Counterparty Exposure Limit for Islamic Banking Institutions, both issued by BNM on 9 July 2014.
Feedback must be submitted electronically to BNM in the template provided by
31 March 2025.
Exposure Draft on Personal Financing
This exposure draft introduces new requirements to abolish the offering of personal financing where interest/ profit charges are computed using flat rate with Rule of 78 method
1. BNM has also clarified its expectations with regards to the application of the maximum personal financing tenure of 10 years to promote healthy practices in the offering of personal financing.
The policy document, when issued, will:
- apply to:
- Licensed banks;
- Licensed Islamic banks;
- Prescribed development financial institutions;
- Approved issuers of a designated payment instrument; and
- Approved issuers of a designated Islamic payment instrument;
- supersede the Policy Document on Personal Financing issued by BNM on 15 December 2023.
As the current Policy Document on Personal Financing dated 15 December 2023 was only recently issued, BNM has directed that feedback should be limited new regulatory requirements and expectations which are labelled as [NEW] in exposure draft, including suggestions on specific issues or areas which need further clarification, or alternative proposals which BNM should consider.
Feedback must be submitted electronically to BNM in the template provided by
14 February 2025.
Exposure Draft on Technology Requirement for Payment Services Regulatees
This exposure draft outlines new requirements on the management of technology risks by payment services regulatees to improve the resilience of payment services and enhance system-wide cyber defence. It also seeks to consolidate all technology requirements for the approved issuers of electronic money, registered merchant acquirers and licensed money services businesses into a single policy document.
The policy document, when issued, will:
- apply to:
- Approved issuers of electronic money;
- Registered merchant acquirers;
- Licensed money service business; and
- Operators of a designated payment system;
- supersede the provisions in the policy documents set out in paragraph 7.1 of the exposure draft.
Feedback must be submitted electronically to BNM in the specified format by e-mail by
30 April 2025.
Exposure Draft on Prudent and Professional Conduct of Insurance and Takaful Brokers
This exposure draft sets out regulatory requirements and further guidance aimed at ensuring the prudent and professional conduct of approved insurance and/or takaful brokers. The requirements in this exposure draft will be incorporated into the Policy Document on the Prudent and Professional Conduct of Insurance and Takaful Brokers issued by BNM on 26 April 2022 (“
Existing Policy Document”).
The requirements under this exposure draft apply to approved insurance brokers and approved takaful brokers.
The documents listed in paragraph 7.1 of the exposure draft will be superseded upon the effective date on which the requirements in the exposure draft are incorporated into the Existing Policy Document.
Feedback must be submitted electronically to BNM in the template provided by
5 February 2025.
Alert by Kok Chee Kheong (Partner) of the Corporate Practice of Skrine.
1 The Rule of 78 method refers to an interest/ profit calculation method by multiplying the total interest/ profit payable over the loan/ financing tenure by a fraction, the numerator of which is the number of periods remaining on such financing at the time the calculation is made, and the denominator of which is the sum of all the whole numbers from one to the number which is the total number of complete months in the period of the loan/ financing agreement. The abolishment of the Rule of 78 is consistent with the joint-efforts by BNM, the Consumer Credit Oversight Board (CCOB) Task Force and the Ministry of Domestic Trade and Cost of Living to prohibit the use of this method through amendments to the Hire Purchase Act 1967, which are scheduled in the first-half of 2025.
This alert contains general information only. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such. For further information, kindly contact skrine@skrine.com.