Borrowers have a funny way of showing gratitude

PTPTN uses CCRIS to ensure that loan takers settle their dues accordingly

MANY people have unhealthy relationships with debt. They borrow for the wrong reasons or take bigger loans than they should. Or worse still, they do both.

As a result, they often have trouble making the repayments. Before long, they are stuck in the shadow cast by three dreaded letters: I, O and U.

This is a problem linked to a low level of financial literacy. People just do not have enough awareness, knowledge, skill, attitude and behaviour to make sound financial decisions that can help them secure their financial wellbeing.

It matters therefore that there are initiatives such as Bank Negara’s Financial Education Network, an interagency platform set up last November to coordinate and drive a national financial education strategy in Malaysia. Hopefully, this strategy will address attitude and behaviour as much as it will awareness, knowledge and skill.

The experience of the National Higher Education Fund Corporation (PTPTN) makes an excellent case study on Malaysians’ poor attitude and behaviour with money, especially borrowed money.

The statutory body has been giving out higher education loans for almost two decades. Up to the end of last year, it had disbursed loans amounting to almost RM49bil, thus helping 2.6 million Malaysians to attend universities and colleges.

But some of the borrowers have a funny way of showing gratitude. They do not pay back what they owe PTPTN, making it harder for the corporation to keep funding students.

To collect the billions of ringgit due from defaulters and to encourage early settlement of loans, PTPTN has more than once offered discounts for a limited time.

In fact, it is again dangling this incentive. In his Budget 2017 speech last October, Prime Minister Datuk Seri Najib Tun Razak announced a 15% discount to those who fully settle their loans and a 10% discount to those who reduce their debts by at least half. The discounts will stop after Dec 31. It is therefore too early to tell if they have persuaded more borrowers to pay up.

However, it is certain that tougher actions by PTPTN in recent times have at least grabbed the attention of the borrowers and others as well.

Such measures include taking legal action, placing borrowers under the Central Credit Reference Information System (which means defaulters risk getting a bad credit rating) and getting the Immigration Department to bar defaulters from leaving the country.

These may have had a part in PTPTN collecting RM3.4bil from borrowers in 2016, RM1.4bil more than its target.

The Employees Provident Fund’s (EPF) statistics yielded additional evidence that a threat works better than a treat, at least in the case of delinquent PTPTN borrowers.

According to the EPF, there was a surge in withdrawals for education last year, and this was mainly to settle education debts.

However, when PTPTN uses the stick instead of the carrot, it is criticised for being harsh and unsympathetic, although it maintains that it can be flexible when a borrower cannot afford to stick to his repayment schedule.

From time to time, the corporation is likened to Ah Long. That is a glaring example of a shallow understanding of financial matters, particularly if such statements come from people who have directly benefited from the loans.

PTPTN is nothing like a loan shark. It’s a keystone of the higher education sector, and contributes significantly to our national development.

Those who refuse to see that and who fail to support PTPTN’s efforts to remain sustainable are blocking many Malaysians’ future access to higher education.

PETALING JAYA: It’s an acronym that loan takers of the National Higher Education Fund Corporation (PTPTN) should be aware of.

CCRIS, or the Central Credit Reference Information System, has a list of their names to ensure that these borrowers repay their loans accordingly.

“If they are good paymasters, borrowers will have a good record (in the CCRIS). They will have no problem when they apply for new loans.

“Their names will be taken off the list once they have fully settled their PTPTN loans,” PTPTN deputy CEO (Policy and Operations) Mastura Mohd Khalid (pic) said.

CCRIS is a database used by financial institutions to evaluate those who apply for loans.

She said all PTPTN borrowers would be listed in the CCRIS once it is time for them to start paying back, which is six months after graduation.

Mastura said PTPTN started to use CCRIS in June 2015.

When a borrower accumulates more than 12 months of PTPTN arrears, she said their names would be sent to the Immigration Department which would bar them from leaving the country.

“Having your name on the CCRIS does not amount to a ‘punishment’. Instead, it is a tool that ensures borrowers are disciplined in repaying their loans,” Mastura said.

PTPTN has provided various means to make it more convenient for borrowers to settle their loans.

On April 1 last year, the corporation announced the option of repaying the loans through online withdrawals of the Employees’ Provident Fund (EPF) Account II.

Of the RM680mil PTPTN collected in January and February, repayment through this option made up 12.9% or RM87.94mil.

Mastura said this was done in 48,911 transactions.

Currently, the amount of arrears owed to PTPTN is about RM7.8bil.

“I believe borrowers would choose to repay their loans through their EPF Account II to clear the arrears before they restructure their loan to ensure they have a clean record in the CCRIS,” she said.

Prior to the option of online withdrawal from their EPF accounts, borrowers had to take out their savings by filling up forms at EPF offices.

In a statement on Friday, PTPTN chairman Datuk Dr Shamsul Anuar Nasarah said: “There is indeed a significant increase in the amount of repayment received through bor rowers’ EPF account II in October, November and December 2016.

“This came up to more than RM100mil each month.

“Overall, from RM3.4bil in repayments received last year, only 32% of it was repaid through borrowers’ EPF Account II.”

Shamsul’s comments was in reference to EPF’s 2016 annual report, which stated that withdrawals for “education” was at RM1.4bil last year, up 152% from RM578mil previously.

EPF chief executive officer Datuk Shahril Ridza Ridzuan said much of the increase was due to the settlement of education debts, adding that he was watching this trend closely.

“A lot of the increase primarily has been for the settlement of education debts.

“This is because of PTPTN’s big push to get their borrowers to pay up,” Shahril said at a briefing on Thursday.