Ms K and her husband bought a terrace house in Sg Siput, Perak in 2001 with a loan of RM44,000 from RHB Bank. According to the loan documents, they had to pay RM 323 per month as settlement for the next 300 months.
Unfortunately, Ms K’s husband lost his job in 2007, and defaulted payment. RHB bank referred the matter to Court and obtained an order to foreclose the loan. But the couple managed to settle the outstanding arrears and the matter did not proceed to auction at that time. The couple were told then, that the legal fees would be incorporated to the loan principal. They then continued paying as shown in the table below.
Details regarding Ms K’s RHB Loan (Calculated from Accounts provided by RHB)
| Year | Amount paid by Ms K that year (RM) | Rate of Interest chargeda | Amount of interest charged that year (RM) |
| 2008 | 7,225 | ~10% | 5150 |
| 2009 | 1,340 | ~10% | 4765 |
| 2010 | 1,084 | ~10% | 5397 |
| 2011 | 3,350 | ~10% | 5927 |
| 2012 | 3,004 | ~10% | 6267 |
| 2013 | 1,150 | ~10% | 6762 |
| 2014 | 6,500 | ~10% | 7129 |
| 2015 | 2,500 | 10.45% | 7506 |
| 2016 | 20,000 | ~6% | 5381 |
| 2017 | 10,800 | ~6% | 3388 |
| 2018 | 11,500 | ~6% | 2865 |
| 2019 | 13,200 | ~6% | (b) |
| 2020 | 6,300 | ~6% | |
| 2021 | 7,550 | ~6% | |
| 2022 | 3,300 | ~6% | |
| 2023 | 3,450 | ~6% | |
| 2024 | 2,550 | ~6% | |
| 2025 | 500 | ~6% | |
| 2026 | 13,252 (MRTA) | ||
| Total paid to RHB | 118,555c |
a = +- 0.2 (ie 9.8 – 10.2% and 5.8 – 6.2%)
b – got tired of calculating!
c – this does not include the amount paid between 2001 and 2007. The accounts RHB sent Ms K was from 2007 onwards.
The RHB loan offer letter in 2001 stated that the interest charged would be BLR + 0.5%. However, after the default in 2007, the interest rate was hiked to 10%. Does this make sense? A borrower who defaults obviously has an income problem. If he/she is prepared to continue servicing the loan, wouldn’t a sympathetic lender cut him/her some slack? Why not offer a BLR – 1% for a short term to allow the person consolidate his financial situation. Hiking up the rate to 10% is surely going to make him/her default again. Is this RHB’s preferred outcome? And why is Bank Negara looking the other way in this matter?
The loan agreement document does say that the
But that is literally, in small print, and in English. Most borrowers would not realise its existence nor its impact, and in any case, would have no choice as they need the loan to buy the house. Perhaps it is now time to modify this clause in housing loan agreements. Increasing loan interest rates for borrowers who are struggling financially certainly does not align with our national aspiration to create a “Caring society”.
However, in Ms K’s case, her husband gritted his teeth and paid at a rate of about RM 1000 per month from 2016 till 2019 to bring the outstanding balance to manageable levels. The bank also brought the interest rate back to 6% in 2016, and this helped pay down the balance.
Unfortunately, Ms K’s husband died in a tragic workplace accident in August 2023. At that time, according to the accounts that RHB provided her, they still had about RM 19,000 to settle. Ms K was told by the bank that there was no MRTA (Mortgage Reducing Term Assurance) taken for this loan. So, she continued paying as much as she could.
However, when she brought her banking documents to the PSM Service Centre in Sg Siput in 2026, we found that MRTA had actually been paid for in 2001, when the loan was passed. When confronted with this evidence, RHB hurriedly transferred RM 13,152 to the loan account in October 2026. This brought the loan balance down to RM 4,689. Actually, the amount would be even lower if RHB had followed proper accounting procedure, and reduced the outstanding amount in August 2023 (date when Ms K’s husband died) by the MRTA amount – the subsequent interest amounts charged would be substantially lower.
Also, if RHB had a heart, it could have recalculated the amount due if the interest rate charged from 2007 till 2015 was 6% pa – the BLR + 0.5% rate mentioned in the loan offer letter. As can be seen by the payment records, this family seriously wanted to honour their bank loan, and they paid a total of RM105,000 for a loan of RM 44,000 between 2007 and 2026. (We have not taken into account the amount they paid between 2001 and 2007.) However, RHB took a totally different route, and added RM 21,689 to the loan balance in October 2026, saying that these were the legal fees. But didn’t the bank itself say that these would be incorporated into the principal in 2007? Why are these charges being re-introduced now?
Then, in early November 2026, RHB pasted an auction notice on the property stating that e-auction has been scheduled for 17/11/26. RHB’s lawyers, Leon & Leong, had applied for the auction date in Taiping High Court in September 2026, using the order obtained in 2007. Ms K was not notified of the 2026 Taiping Court hearing and therefore could not attend to inform the Court the relevant details.
The callousness and uncaring attitude of RHB is reprehensible.
- Why was the interest rate hiked up to 10% from 2007 till 2015? Yes, the couple had problems keeping up with the payment. But why make it even more difficult for them to normalize their payments?
- Why did RHB refuse to admit the MRTA until the borrower came up with documentary evidence? Shouldn’t RHB have record of the MRTA in its records? In fact, MRTA is clearly mentioned in the loan offer letter.
- Why didn’t the RHB subtract the MRTA payment from the date the husband died?
- Why didn’t RHB notify Ms K about the legal charges until the last moment? Weren’t the legal costs incorporated into the principal in 2007? Is Ms K being double charged now? Was there due-diligence in this matter?
- Why didn’t RHB call in Ms K for a discussion before proceeding to auction? The family had settled more than RM 105,000 for a RM 44,000 loan. It should be clear that they were trying their best to settle their loan obligations. And RHB has already got a handsome profit from this account.
- Why wasn’t Ms K informed about the High Court application to proceed to auction? Her right to present her side of the story was denied.
Buying a house is a major financial undertaking for most working class families. A significant part of family income goes into loan repayment. If we assume that on the average, Ms K’s husband earned 2.4 times the minimum wage, then his total earning from 2007 till his death in 2023 would have been about RM 538,560. RM 105,000 represents 19.5% of that. Shouldn’t banks respect that sacrifice and commitment, and bend over backwards to avoid dispossessing house-buyers who expend sweat and tears in meeting their loan obligations? RHB’s annual profits in 2025 was RM 3.36 billion. House-buyers like Ms K and her husband contribute to RHB’s handsome earnings. Shouldn’t RHB be fair and even-handed in its handling of home-loan clients?
RHB’s callous/careless actions with regards to Ms K’s case are multiple and varied, and they signal a disturbing lack of concern and respect for their lower income clients. Bank Negara should step in and, at the very least, conduct a forensic audit into the last 50 houses that were auctioned by RHB to find out the prevalence of careless and callous decisions on the part of RHB Bank. This audit should be by an independent external party – it cannot be left to the RHB Bank itself. RHB Bank’s deficit in due diligence has to be called out and stopped. Banks should not be allowed to bully their small clients! Bank Negara must rise to the occasion!
Jeyakumar Devaraj
Chairperson
Parti Sosialis Malaysia
12th November 2026