bank negara sets the OPR (overnight policy rate, now 2%). then the banks are given full liberty to set a BLR above that, based on whatever (well, their cost + the profit they want). normally all banks will choose the same BLR, because of competition (now 5.55%; i think one bank chose 5.5%).

then your loan agreement is fixed at BLR +- something%. but since the banks can modify their own BLR, then basically the banks can adjust your % according to their whim la. if bank negara asks, they'll just say their costs have increased, bla bla bla... that's the current rule.