The National Consumer Complaints Centre has ticked off Bank Negara for not keeping a closer eye on the terms of personal loans given by commercial banks.

"How could Bank Negara allow such things to happen? I don't think Bank Negara is looking into the welfare of people,"said its director Darshan Singh when contacted.

He was commenting on a report on the interest rate for CIMB's Xpress Cash pre-approved loan of RM5,000. The bank claims that the 'reducing interest rate' is lower than that of other banks which offer flat rates.

The scheme is being offered to selected customers by mail. An interest rate of three percent per month is levied on a reducing balance on a daily basis.

At the end of two years, the borrower would have paid RM7,104. At the end of four years, a total of RM9,104 would have been paid.

"Offering such high rates (is tantamount to) legalising ah long -style money lending," Darshan said.

The bank had previously rejected any such comparison.

Other loan schemes

Malaysiakini also checked with the call-centres of three other banks to get details of personal loan schemes ( see chart below ).

It was found that the interest rate and monthly instalments were lower than that of CIMB for a personal loan of RM5,000 to be repaid over a comparitive period of two years.

UOB's Easi-Cash scheme has a flat interest rate from 8.48 percent per annum, with a monthly instalment of RM260.

Ambank's Financing-I plan for government and semi-government employees charges a flat rate of 7.3 percent per year, with monthly payments of RM248.

Public Bank's BAE Personal Financing-I Plan for government employees of selected state governments, government agencies and statutory bodies seeks a monthly instalment of RM232. It imposes an interest rate of 5.5 percent.

When contacted, a Bank Negara official declined comment on the basis that "it is not our practice to answer malaysiakini ".

Kuantan Hawkers and Petty Traders Association president Khoo Kok Seng said such loans may be helpful to the small businessman, but that the interest rate is too high.

He said one reason why traders usually borrow from ah long instead of banks is because payments can be made in a small sum on a daily basis.

"The ah long charge RM13 a day (in interest) for a RM1,000 loan," he said.

Government ministers have previously urged practical measures to prevent people from approaching unlicensed money lenders and later being harassed for payment.