Asian Seminar on Financial Literacy & Inclusion

Transcription

1 Asian Seminar on Financial Literacy & Inclusion Financial Education on Credit 11 September 2012 Koid Swee Lian, CEO Credit Counselling & Debt Management Agency (AKPK) 1

2 Malaysia Economic Statistics GDP Growth RM558.4 bil (7.2%) RM588.3 bil (5.1%) Gross National Savings to GNI 34.2% 34.6% HH Deposits RM417.4 bil RM468.6 bil Debt Repayment (excl. credit cards) RM120.8 bil RM135.3 bil Estimated debt service burden (ratio of debt repayment to disposable income) 47.8% 48.1% Inflation rate 1.7% 3.2% Population (mil persons) 28.3 mil 28.6 mil Labour force (mil persons) 12.2 mil 12.6 mil Employment (mil persons) 11.8 mil 12.2 mil Per Capita Income RM26,219 RM28,175 (USD8,140) (USD9,204) Ratio on HH Debts to GDP 75.9% 76.6% GDP Value RM765.9 bil RM852.6 bil Source: Bank Negara Malaysia (BNM), including BNM s Annual Report 2011, and Financial Stability & Payment Systems Report

3 Survey feedback of 1,002 respondents aged % took car loans 39% possessed credit cards 90% had only up to 2 credit cards 10% had 3-6 cards 33% took study loans 28.9% took housing loans 15% took personal loans Debts of Young Workers Source: Survey of Financial Behaviours & Financial Habits of Young Workers undertaken by Consumer Research & Resource Centre, Malaysia for the Central Region in July

4 Set up in 2006 by Bank Negara Malaysia (BNM) Part of financial consumer protection framework More resilient household sector AKPK s Roles Sound & robust banking system Avenue for existing & potential individual borrowers to enhance financial discipline: Education Credit counseling Debt management Facilitates debt repayment efforts Minimizes incidence of loan default arising from poor debt management 4

5 AKPK s Services - Money Sense Book/ module - POWER! Book/module - Use simple & plain language - Collaborate with smart partners Financial Education Credit Counselling Debt Management - Personalized programme - Review fin. condition & tailor solutions - Ongoing counselling & education One-to-one: - Advise on credit & related issues - Assist in analyzing fin. situation & identifying options to address credit issues SERVICES ARE FREE OF CHARGE 5

6 Credit Counselling Who is eligible? Retail consumer Pre-condition? Attend public briefing session Counselling process Review financial/credit issues Devise personal budget plan Cash-flow management Post-counselling decision Debt management advice

7 Debt Management Programme (DMP) Assistance Help resolving financial problems with banks/card issuers Tailor made solutions for credit problems Negotiate with lenders on borrowers behalf - no legal power Qualifying Criteria for DMP Not a bankrupt Positive net disposable income Not under advanced legal action Loan exposure of < RM2 million (US$0.6mil)

8 Central Credit Reference Information System Administered by Credit Bureau, BNM - Central Bank of Malaysia Act 2009 System that collects credit information on FIs borrowers Consumer can verify accuracy of information reported in his/her credit report effective in educating borrowers on their total loan exposure & that there is no running away from their loan obligations Credit report provided to individuals free of charge at BNM or via mail by submitting: credit report request form, loan declaration form, copy of identity card/passport (foreigners) and any 2 : driving licence, utility bill, bank account statement, credit card statement or EPF statement Child can obtain Credit Report of sick/deceased parent subject to production of appropriate supporting documents 8

9 Guidelines on Responsible Financing Financial Institutions Borrowers affordability based on prudent debt service ratios Enable borrowers understand full implication of borrowing, disclose information on: -Total finance cost -Total repayment amount -Increase in financing rate Retail Consumers Capacity to access financing Purposeful borrowing Affordability & suitability Be wise borrowers/spenders Inculcate good credit culture - Live within means - Needs vs. Wants - Delay gratification Guidelines (wef 1/1/2012) promote consistent practices in assessing consumers creditworthiness & ability to repay

10 Self Help Guide: Debt Relief Plan Step by step guide for borrowers to negotiate restructuring /rescheduling of their loan(s) Preparing the monthly budget Debt repayment proposal Formula for pro-rata payment Sample debt repayment proposal letters: single lender, multiple lenders /full & final settlement Debt relief flowchart Empowers borrowers to take control of debts Enhances borrower s financial: Knowledge Behaviour Attitude 12

11 Launched on 19 January 2011 Designed to equip young adults & potential borrowers on how to manage their debts effectively & make informed financial decisions Targeted education programme for young adults (18-30 years old), firsttime borrowers & potential borrowers, including hearing impaired Certificate of completion Managing Your Debts Effectively 13

12 Programme Module Module Cash Flow Management Borrowing Basics Wise Usage of Credit Card Key Contents Smart living: identify needs and wants Develop personal budget & cash flow/net worth statement Knowing financial position & net worth Common sources of personal credit & key features of credit facilities Key lending criteria Cost of borrowing & setting own debt limit Rights & responsibilities of a borrower Different types of cards - debit, credit & charge card Understanding terms & conditions of credit cards Using credit cards wisely Responsibility to protect credit cards 14

13 Programme Module Module Buying a Car Buying a House Managing your Debts Key Contents Factors to consider when buying a car - affordability, maintenance expenses Terms & conditions of hire purchase agreement - term charges, early settlement & repossession Affordability and types of house ownership Understanding terms & conditions of house financing Understanding rights & responsibilities of a borrower Consequences of loan default Contributions to over- indebtedness & consequences Importance of building & maintaining good credit history Available advisory & redress services 15

14 Online Learning Portal: power.akpk.org.my Useful for IT savvy young adults Easy & convenient to learn money mgt Learn at own pace & time Lively, interactive & amusing animation IQ games to make learning interesting Virtual certificate of completion As at 31/07/12 108,603 participants 16

15 Other Financial Education Initiatives 1. Publication of financial articles in newspapers, magazines, etc. 2. Docu-drama based on real life cases 13 episodes 3. Website (information and educational) - Online reference/response 4. Publication of monthly E-Newsletters ReadSens 5. Financial education at work place - briefings/talks at private & public entities 6. Nationwide road shows, workshops, seminars & financial exhibitions 7. Training of Trainers with smart-partners providing trainers & participants 8. Distribution of informational booklets on banking & insurance 9. Micro blogging on finance & credit issues at Personal Financial Management being offered as an elective /co-curriculum subject in 44 universities & 30 polytechnics 11. University & polytechnic students attend POWER! Programme before graduation 17

16 Thank You Make Prudent Financial Management a Way of Life