Thursday 28 Mar 2024
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KUALA LUMPUR (April 3): Borrowings by the vulnerable segment (borrowers with monthly earnings of less than RM3,000) continued to decline in 2019. However, Bank Negara Malaysia (BNM) cautions that default risks among this group of borrowers remain elevated.

“Their leverage levels remain high at about nine times in the second half of 2019, mainly due to borrowings for the purchase of homes. Their low financial buffers also mean that they would have greater difficulty maintaining debt repayments in times of stress,” said BNM.

The central bank explained that low income, coupled with poor financial planning, continued to be the main causes of financial difficulty faced by these borrowers, as they tend to overestimate their ability to cope with higher costs of living and debt obligations.

However, BNM expects risk levels in this borrower segment to recede with greater support made available for individuals to obtain financial advice and education, via the Credit Counselling and Debt Management Agency.

For more stories on BNM's annual report, click here.

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