KUALA LUMPUR, Sept 29 — Malaysia’s largest lender urged authorities today to step up monitoring of personal loans, saying that it was becoming a cause for concern.

[This comes as the nation’s household debt increased from 66.7 per cent in 2004 to 76 per cent in 2009, which is uncomfortably close to US levels prior to the 2008 financial crisis.[/B]

Malaysians are facing increasing financial pressures as salaries have not kept up with inflation and many turn to personal loans and credit cards to help fund living expenses.

The size of the money lending industry is reflected by the extent of advertising of personal loans, many with the interest rate of one per cent a month.

Some vernacular newspapers carry two to three full pages of advertisements for personal loans and stickers promoting money lending vendors also appear frequently pasted on lamp posts, vacant shoplots and the boots of taxi cabs.

Figures provided by Bank Negara in March show that personal loans made up 15 per cent of the overall household debt composition.

“We need stronger enforcement on personal loans,” said Maybank CEO Datuk Seri Abdul Wahid Omar in a press conference following Maybank’s AGM here today.

He also suggested that non-bank lenders of personal loans should look at adopting some of the same standards as the banks with regards to underwriting the loans.

The Maybank chief also expressed concern that there was “over-competition” in Malaysia’s banking sector with banks being aggressive in pricing their loans to attract customers.

Wahid said that Maybank’s loans growth is expected to slow as it was typically twice that of the country’s GDP growth rate which is also expected to slow this year, but added that the quality of its assets would continue to improve.

Figures provided by Bank Negara in March showed that “liquid” assets accounted for 64.6 per cent of household financial assets but 30 per cent of those assets comprise EPF savings which are meant to be savings for retirement.

Housing loans meanwhile accounted for 45 per cent of household debt followed by car financing at 20 per cent, personal loans at 15 per cent and credit cards and purchase of securities, each at 5 per cent.

The central bank is expected to introduce a new set of lending guidelines in the third quarter of this year to help strengthen responsible lending by banks to households.

Large numbers of Malaysians are also facing distress arising from poor management of personal finances.

Some 147,000 individuals have enrolled in programmes sponsored by Bank Negara’s Credit Counselling And Debt Management Agency (AKPK) since 2006.

Married individuals made up the bulk of those enrolled in AKPK programmes during the period starting 2007 to March 2011 at 76.6 per cent while 43.6 per cent were between the ages of 30 and 40.