by S BIRRUNTHA / pic MUHD AMIN NAHARUL

THE proposal to allow Employees Provident Fund (EPF) members to use their savings as collateral for bank loans needs to have the right framework, said Bank Negara Malaysia (BNM) governor Tan Sri Datuk Nor Shamsiah Mohd Yunus.

She stated that it was important for the EPF collateral scheme to have the right features and protections so that borrowers could afford and be able to repay the loan from their respective sources of income.

She added that, at the same time, it also needs to be ensured that EPF contributors have strong financial savings by retirement age.  

“Currently the complete details regarding the EPF contribution measures are not yet available,” she said during the press conference following the launch of BNM’s 2022 Annual Report today.

Previously, the government announced that it allows EPF contributors to use the savings in their Account 2 as collateral for bank loans to get them through difficult times.

Prime Minister Datuk Seri Anwar Ibrahim previously said that the method of applying for bank loans would not jeopardise the interests of EPF members, because they would continue receiving dividends on the savings used as collateral.

During the minister’s question time in the Dewan Rakyat on March 21, Anwar said the risk to the EPF is minimal, as there would be returns of collateral in several years, even if a small number of members fail to pay their loans.