PSD: Drastic move to get borrowers to pay up

Saturday April 12, 2008

By SIM LEOI LEOI

PUTRAJAYA: Defaulters of government study loans may soon find themselves on the credit-rating blacklist and unable to get loans from financial institutions.

In a drastic move to get defaulters to pay up, the Public Service Department (PSD) will hold discussions with Bank Negara to participate in the Central Credit Reference Information System (CCRIS).

PSD has also consulted legal experts on the matter and has been given the clearance to go ahead with the move.

CCRIS, which is run by Bank Negara, keeps the financial history of all those who have taken loans and is widely used by financial institutions to check a loan applicants’ credit worthiness when processing applications for housing and car loans, and even credit cards.

PSD’s Human Capital Development division director Datin Madinah Mohamad said the drastic move was being considered as the department’s funds would last only until 2010 if its efforts to collect the study loans were not stepped up.

“The money that goes into these loans comes from a revolving fund. This means that if those who have previously taken the loans don’t pay back, we won’t be able to help needy students in the future.

“These funds are duit rakyat (taxpayers’ money). So far, we have had 11,253 loan defaulters, among them 866 civil servants, who have yet to repay their loans amounting to some RM135.8mil.

“We hope to participate in CCRIS in a few months’ time, probably this year,” she said in an interview here yesterday.

Madinah said the implications of PSD joining CCRIS would be huge on loan defaulters as the system contained the financial records of all loan applicants.

“This means details of their PSD loans will be included in their credit history, which will come up each time they apply for credit cards or loans. It will also give us information that will facilitate us in tracking down the defaulters,” she said, adding that each year, 500 applicants received loans.

The department has given out loans to 151,707 students pursuing their first degrees in overseas universities between 1987 and last year. Some 78% – 118,003 students – have either repaid their loans or started repaying.

“The list of defaulters will be published in newspapers in May,” she said.

National Higher Education Fund Corp (PTPTN) CEO Yunos Abdul Ghani said he would consider implementing a similar move to get loan defaulters to pay up.

“As it is a government initiative, we will probably go along with it. I will have to bring this matter up at the next board meeting.”