From the sos i gather, might be expired or not halal.

Overview:
1. this company is licensed under the Moneylending Act 1951.
2. the company is under the purview of Ministry of Housing and Local Government.

The Moneylending Act initially enacted with good intentions to protect citizens from unscrupulous Money Lenders, for instance imposing ridiculous terms and conditions loans borrowed from this entities.

The Moneylending Act is the bible from A to Z to all Moneylenders.

It is also known (at least to Money Lenders) as one of the most poorly drafted legislation, least understood (there is only a handful of law firms specializing/dealing in the Moneylending Act), draconian and also obsolete legislation which continues to be embroiled with disputes.

Since the inception of the Moneyleding Act, it has evolved into other businesses such as raising funds for IPO. Although there is no specific mention in the Act that such businesses can be done, exemption is given by the respective Ministry. In areas of taking collateral, there is also no mention of shares being used by the Money lender as collateral but numerous money lenders are doing it.

Why Moneylending Act and not BAFIA?
Reason being the regulatory and capital requirements are extremely different.

Why borrow from a license Moneylender instead of a commercial bank?
For reasons unbeknown to me at least, moneylenders seems to take in all sorts of customers regardless of their credit.

So what interest do they charge?
The interest charged by Money lenders are fixed by law.

s.17A Moneylending Act

Secured = 12%p.a
Unsecured = 18% p.a

So what about the loan documentation?
The law also sets down one type of agreement to be signed between the moneylender and the borrower.

Perhaps two of the most infamous Agreements are:
Schedule J (unsecured)
Schedule K (secured)

How does RCE benefit from arrangements from the so called "Kooperasi."
1. Interest Rates are fixed above the normal lending rates by banks (unless exemption obtained for a lower interest rate, which i am not aware of).
2. default, very unlikely. Especially when dues are directly deducted from your salary!
3. low cost leading to higher profit margins. every month only collect interest+installment payment, how easy life is!
4. increase in lending rate by normal commercial banks will drive more ppl to seek out Moneylenders as alternative.
5. ability to borrow from commercial banks and profit from it!

Con.
1. it takes only one Moneylender to be haul to court leading to a landmark decision which will cause the collapse of this industry.
2. changes/amendments to the Moneylending act
3. dissolution of the arrangement
4. higher default rate(unlikely, unless gomen forgot to pay salary)
5. finally the cream of it all... RCE losing its license.

This post has been edited by aurora97: Apr 10 2010, 08:56 AM

In this world or at least in reality, i believe 90% (optimistic figure) of those people who give would expect something in return, one way or the other. The rest of the 10% i leave it to your creativity.

For RCECAP, shareholders/investors actually plough money into a company and expect return from their investment. Which begs the question who would want to invest in a money losing business.

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the question lingers, if RCECAP was such a good business what is its potential for growth in the short, medium and long run especially with a business lending exclusively (or a majority) to Civil Servants.

the formula looks like sure win, but can it grow