Malaysia unveils policy for the disposal and purchase of impaired loans

The policy aims to provide a larger pool of buyers for the market, the central bank said.

Malaysia’s central bank has issued a policy document on the disposal and purchase of impaired loans and financing.

The policy document, effective 25 June, “aims to provide a larger pool of buyers for impaired loans/financing market, strengthen conduct requirements to provide appropriate protection to borrowers whose loans [or] financing are sold to non-bank buyers and promote greater efficiency in disposal/purchase of impaired loans [or] financing,” the Bank Negara Malaysia (BNM) said in a press release published on its website.

The policy is applicable to licensed banks, licensed investment banks, licensed Islamic banks, and non-bank buyers in Malaysia.

Earlier in 2023, BNM kicked off public and industry consultation for a draft of the policy, where it received 33 respondents from 31 banking institutions and 2 non-bank institutions. 

Separately, the BNM has also proposed revisions to its Islamic banking regulations.