Bank Negara Malaysia Issues Policy Document On Reference Rate Framework.

The RRF PD, when it comes into effect, will apply to:
 

• banks licensed under the Financial Services Act 2013;

• Islamic banks licensed under the Islamic Financial Services Act 2013; and

• development financial institutions prescribed under the Development Financial Institutions Act 2002, 
 

(collectively, the “FSPs”).
 

With effect from 1 August 2022, a Standardised Base Rate (which will be linked solely to the Overnight Policy Rate (“OPR”)) will be used as the common reference rate for pricing of all new retail loans or retail Shariah-compliant financing facilities (including, without limitation, housing loans/financing, vehicle loans/financing and personal loans/financing).
 

Any change to the Standardised Base Rate will only occur when there is a change to the OPR, as determined by the Monetary Policy Committee of BNM. Other components of loan pricing such as borrower’s credit risk, liquidity risk premium, operating costs, profit margin and other costs will continue to be reflected in the spread above the Standardised Base Rate.
 

BNM has indicated that the shift towards the new Standardised Base Rate will not impact the effecting lending rates of existing retail loans or retail Shariah-compliant financing facilities
 

The RRF PD, when it comes to effect on 1 August 2022, will supersede the policy document on Reference Rate Framework which was issued on 18 August 2016.