Effective January 1, 2027, Bank Negara Malaysia (BNM) will enforce a regulation mandating that all financial customers seeking personal loans above RM100,000 must first complete a financial education module. This module may be administered by the financial institution or by the Credit Counselling and Debt Management Agency (AKPK).
In addition, BNM also encourages consumers classified as high-risk, especially vulnerable groups with limited financial literacy, to also undergo this educational process before they enter into any new financing contracts.
The basis is outlined in the Policy Document on Personal Financing issued by BNM on September 30, 2025, along with several other important measures such as prohibiting the flat rate method or the Rule of 78 in calculating profits, and the requirement to record Buy Now Pay Later (BNPL) transactions in the Central Credit Reference Information System (CCRIS).
This new policy is particularly significant from an Islamic financial perspective as it enhances consumer protection and promotes public awareness regarding prudent debt management. Within the framework of maqasid al-Shariah, financial education can be interpreted as an effort to preserve wealth (hifz al-mal) and intellect (hifz al-‘aql). Wealth is preserved when individuals do not waste or destroy themselves with unmanageable debt burdens. Rationality is also preserved when users make financial decisions with sufficient knowledge and are not misled by vague or misleading offers.
The Quran emphasizes: “And do not waste excessively. Indeed, the wasteful are brothers of the devils” (al-Isra’, 17:26-27). The Quran also reminds us: “And do not destroy yourselves” (al-Nisa’, 4:29). These verses explicitly require Muslims to handle their finances prudently and eschew excessive indebtedness
In another verse regarding debt (al-Baqarah, 2:282), the Quran mandates that all financial arrangements be explicitly articulated, documented, and attested to avert injustice or fraud. Financial education prior to contract signing serves as a preliminary elucidation that resonates with the essence of this verse.
The Prophet Muhammad (peace be upon him) himself warned that debt is not a trivial matter. He often prayed to be kept from the burden of debt, and said that delaying payment without reason was a form of injustice. This hadith outlines the etiquette of borrowing – it is only permissible to borrow when it is truly necessary and within manageable amounts.
A key feature of this new policy is its emphasis on vulnerable populations or high-risk individuals. This includes the elderly, persons with impairments, newcomers to financial goods, and individuals with limited financial literacy.
The measure to offer enhanced protection to these groups is consistent with the Policy Document on Fair Treatment of Financial Consumers (FTFC) implemented by BNM in 2024. In Islam, prioritizing the weak is a moral obligation grounded in the ideals of justice (al-‘adl) and benevolence (ihsan). With educational modules, users are more likely to understand debt risks in depth, assess their capabilities, and avoid being trapped by complex financial products. This initiative not only protects them but also strengthens social justice, which is the foundation of Shariah.
Debt is not a shortcut to fulfilling a lifestyle. Conversely, it should be utilized solely when indispensable, particularly for essential requirements such as education, housing, or other fundamental demands.
If implemented effectively, this new policy is expected to bring about several significant positive effects. Among other things, it can help users understand the implications of debt, which will make them more cautious before making any financial commitments. Additionally, Bank Negara Malaysia’s move to require financial service providers to record BNPL transactions of customers in the CCRIS will make credit records more comprehensive, thereby educating the public not to take lightly accumulated small debts.
Considering that the implementation of this financial education module will only begin in 2027, consumers have yet to get confirmation regarding its execution. Considerations about the financial implications and duration of the course—specifically, if it imposes a strain on potential financial customers; and inclusivity—whether the module is comprehensible to individuals with varied educational backgrounds; are critical for stakeholders associated with this module.
At the same time, BNM needs to ensure that the financial service providers’ organization of educational modules is not used as a platform or marketing channel for their products. Instead, it must provide an honest and balanced disclosure of the benefits and risks of financing.
In short, this step by BNM needs to be seen as a moral and syariah trust, rather than merely an additional requirement. It educates the public to adopt greater responsibility in financial affairs, and ensure that each decision is informed and comprehensible.
Should this module be implemented well – inclusively, honestly, and effectively – it will not only support the transparency of financial markets, but also build a financially literate society as advocated by Shariah i.e. one that is resilient and liberated from the encumbrance of debt.
