The Malaysian Association of Borrowers and Consumers Solution has warned that as many as 32,000 borrowers could be declared bankrupt over the next two years if Bank Negara Malaysia (BNM) continues to increase the overnight policy rate (OPR). This will be a 70% increase from the existing bankruptcy reported in the country.
Group president Rosland Mohd Arif said more than 46,000 people have been declared bankrupt since the pandemic began because they were unable to repay their bank loans.
He added that further interest rate hikes would result in borrowers having to fork out more money to repay their loans – including car, housing and personal 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.
“From the movement control order until now, more than 46,000 people have been declared bankrupt because they were unable to repay their bank loans,” Rosland Mohd Arif said as reported by Utusan Malaysia.
He further clarified many of these debtors had car loans, personal loans and housing loans; and comprised a large number of civil servants.
“Some 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,” he said.
Last week, BNM 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. Several researchers and financial institutions also expect BNM to gradually increase the OPR to 3.00% by 2023.
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