KUCHING, March 12: Sarawak United People’s Party (SUPP) Stakan chairman Dato Sim Kiang Chiok opines that the proposal to use Employees Provident Fund (EPF) Account 2 savings as collateral for personal bank loans is a viable option for those in need of cash.
In a statement, SIM said that Account 2 of the EPF is 30 per cent of the contribution and can be withdrawn at any time for repayment or as a deposit for housing and education fees for children even before the contributor reaches the age of 55.
“To allow Account 2 as collateral to raise a bank loan is a good option for the contributor who might not need the savings for housing or children’s education fee,” he said.
“The fear that if a bank loan defaults, the contributor will lose all the savings in his EPF is not possible as the collateral is only at maximum 30 per cent of the total EPF savings.”
Sim said because the loan is secured by EPF Account 2 as collateral, the interest rate on the bank loan can be lower and the loan tenure can be longer.
“It’s good that this option is open to the contributor, and it will save many contributors from borrowing from other improper lenders with higher interest costs and unfair terms,” he added. — DayakDaily