Not many takers for PTPTN’s Ujrah scheme

KUALA LUMPUR: The National Higher Education Fund Corporation’s ( PTPTN) Syariah- compliant Ujrah loan repayment scheme, which was introduced seven years ago, has received lukewarm response from borrowers.

Only 23 per cent or 257,582 out of the 1.1 million borrowers, who were under the conventional loan repayment scheme prior to the introduction of the Ujrah scheme in 2008, have switched to the Islamic financing scheme, according to PTPTN chief officer for marketing and strategic communications Mastura Mohd Khalid.

As of May 31 this year PTPTN, which was established in 1997, has disbursed study loans worth RM52.2 billion to a total of 2.3 million people.

The Ujrah scheme was introduced in 2008 to encourage borrowers to settle their outstanding loans faster at a lower fee.

While the conventional scheme charges an administrative fee ranging from three per cent to five per cent per annum on the reducing balance, the Ujrah scheme charges a flat fixed rate of one per cent per annum.

Since it is obvious that borrowers can make a saving on fee payments by opting for the Ujrah scheme, why aren’t they beating a path to PTPTN to have their loans converted?

Economical Scheme

Said Mastura: “I’m not sure why not many borrowers are switching to the Ujrah scheme. I don’t know if it is because not many are aware of it or they just don’t want to change their loan agreement.

“If you look carefully, many of them are hard- core defaulters who have not even made a single repayment to PTPTN. They couldn’t care less what happened to their loan accounts,” she said.

She said the rather low conventional-to-Ujrah conversion rate could also be due to the perception that it entailed a cumbersome process.

She also pointed out that the Ujrah scheme allowed borrowers to make an estimated 50 per cent saving on the administrative fee.

“Under the Ujrah scheme, a flat fixed rate of one per cent is charged on the borrower’s outstanding balance. For example, if the principal loan amount is RM15,000 and the borrower has already repaid RM3,000, then the one per cent rate is imposed on the balance sum of RM12,000 and not on the principal amount.

“We hope that borrowers will no longer have any misconceptions about the calculations under the Ujrah scheme,” she told Bernama during an interview recently. Reschedule Payment

Structure

According to Mastura, borrowers who opt for the Ujrah scheme also have the advantage of applying to the PTPTN to have their repayment structures rescheduled, something which the conventional borrowers were not eligible for.

She also assured borrowers that their Ujrah loan facility would not be withdrawn even if they defaulted on their monthly payments.

“But action will be taken against all borrowers, regardless of whether they’re under the conventional or Ujrah scheme, if they’re not consistent in their payments. But we’re hoping that when they convert to Ujrah, they would become more consistent in their payments.

“If a borrower doesn’t pay, his loan account will go into default and we will send him a notice reminding him to pay up,” she said.

PTPTN’s Action

Explaining why PTPTN has to take stern action against persistent defaulters, Mastura said in view of the corporation’s rather low collection rate of 46 per cent, it was necessary to replenish the fund to enable PTPTN to continue giving out study loans in future.

A borrower was categorised as a persistent defaulter if he had not made a single payment for a period of three years, she said.

“Someone whose payment is one-month overdue or who even fails to pay for up to one year is not considered a persistent defaulter,” she added. — Bernama