What is that???
Ur loan is based on NET INCOME not gross anymore.
more: http://arminbaniaz2.blogspot.com/2012/02/bank-negara-guidelines-on-responsible.html
KUALA LUMPUR: Bank Negara Malaysia (BNM) has today issued guidelines to financial institutions aimed at promoting prudent, responsible and transparent retail financing practices.
In a statement Friday, central bank said the guidelines, effective Jan 1, would complement other measures that promote better protection for financial consumers and a sustainable credit market that contributes towards preserving financial and macro-economic stability.
The guidelines require financial institutions to make assessments of a borrower's ability to afford financing facilities based on a prudent debt service ratio as inputs to their credit decisions.
Financial institutions must make appropriate enquiries into a prospective borrower's income after statutory deductions for tax and EPF, and consider all debt obligations, in assessing affordability, it said.
"While this is consistent with the current practice of most financial institutions, the guidelines will facilitate a sharper focus and more consistent approach across the industry to assessments of individual affordability.
"This guideline will thus ensure that the increasingly competitive conditions will not lead financial institutions to compromise prudent and responsible financing practices," the central bank added.
The guidelines also stipulated that the maximum tenure for vehicle financing applications received from Nov 18, 2011, should not exceed nine years.
The main governing body for financial institutions also said the guidelines additionally aimed to encourage sound borrowing decisions by consumers through better engagements with financial institutions that would help consumers carefully consider their ability to service all their debt obligations without recourse to further debt or substantial hardship.
"Clear expectations are also placed on financial institutions to ensure that consumers are treated fairly in the sales, marketing and administration of financing facilities," it said.
Under the new measures, financial institutions are also required to provide consumers with specific information on the total repayment amount and total interest cost, as well as, the impact of an increase in the financing rate to ensure that consumers understand the full implications of a borrowing decision.
The central bank said it would continue its surveillance and supervisory activities to ensure the requirements were properly implemented.
Apart from the financial institutions under Bank Negara Malaysia's purview, the Cooperatives Commission will also impose requirements on responsible financing practices on credit cooperatives.
"This will ensure that key providers of financing to the household sector will observe similar responsible financing practices," the central bank added.