Laws And Regulations Around Personal Loans

The Central Bank Regulation No. 29/2011 On Bank Loans & Other Services Provided to Individual Customers regulates the relationship between banks (conventional and Islamic) and finance companies on the one hand, and their individual customers on the other, in a more transparent manner, so as to boost confidence in banks and finance companies and enhance credibility of the banking system.

What is a personal loan?

Under Central Bank Regulation No. 29/2011, personal loan is defined as a loan that is given to individual customers, where repayments are made out of salary and end of service indemnity and/or any other verifiable regular income from a well- defined source.

A bank or a finance company must not provide personal loan above twenty times the salary or the total income of the borrower. Additionally, the repayment period must not exceed 48 months. In order to ensure that the monthly installments deducted for repayment of this loan and resulting interest are