Malaysian Government Loans

Malaysian Government Loans

As a civil servant or an employee in the public service, you are entitled to several types of benefits which include lower interest loans from many private and public companies. How different are they as compared to those in the market?

What is a government loan?

Typically, a government loan is sometimes referred to in the following terms:

  1. civil servant loan
  2. GLC loan
  3. GLC personal loan
  4. and many others

GLC stands for Government-linked Company and there are many such organizations in Malaysia. The loans that are offered by these organizations are usually unsecured financing options that are specifically catered for those working in the public service. This simply means that this loan will not be applicable for those working in MNCs and other companies.

What does a GLC loan mean?

A loan offered by GLC means that should you be eligible, you could enjoy lower interest rates or profit rates. In most cases, this is because the loan provider is aware that the income group of public servants are generally lower than that of those in the private service. As such, there will be a need to provide all types of loans that are competitive so that civil servants are able to enjoy the same demands in life. In most cases, you will need to provide a letter from your employer to confirm your employment and the repayment will be done via auto-debit.

Who offers the loans?

Although they are known as government loans, it is not offered by the Malaysian government itself. This is because the government is not a financial institution which means it does not have the jurisdiction to offer loans. However, in some cases, the government does offer financial aids or reliefs in the form of grants and subsidies. This comes in the form of aids like BR1M which are given out for free without any obligation for payback. It is however catered only for those that are eligible.

Interest Rates from government loans

As mentioned, the interest rates offered through these loans are below market levels. Because of this, it is very common to come across loans that are between 3 and 4% and the way to calculate them is very much the same as any other type of loan. Some organizations like banks however offer loans based on a fixed interest rate while others offer a Floating interest rate which relies on the Base Rate.

Who qualifiers for a government loan

To qualify for a government loan, you must be a Malaysian citizen or a Permanent Resident. Besides that, you must be a government servant or is employed by one of the many government-linked companies or agencies. In other words, you should be working with one of the many ministries, agencies or departments of the government or in companies like Petronas, Sime Darby or Felda, all of which are GLCs.

Apart from that, you must be above 18 years of age and not more than 60 and have a monthly income of more than RM1,000. This is where you need to provide proof that you fulfill all the criteria mentioned either through documents or letters from your employer. Pay slips and income tax statements are other documents required. Once you have submitted the documents and any other related items, the bank or financial institution will verify your credit ratings before making a decision. In most cases, banks will offer between 6 and 10 times your monthly salary as the borrowable amount.

Organizations offering government loans

There are various banks that offer loans for public servants. They are usually distinct from their other loan products which come with extra verification and lower interest rates. Among them include:

RHB Personal Financing i-Civil Sector

This loan is customized for government employees that offer a low profit rate of 4.5% per annum. Its fixed rate package makes it an attractive product which is compliant with Syariah principles. The loan package is offered to those who are active in the civil sector as well as government pensioners . Among its features are:

  1. Low interest rate of 4.5% per annum
  2. loan amount of up to RM200,000
  3. repayment term of up to 10 years
  4. no early settlement penalty with prior notice


This is an Islamic loan based on the Syariah principles offered by Koperasi UKHWAH Malaysia Berhad. As a cooperative formed under the Akta Koperasi 1993, loan applications are treated more leniently as compared to banks. Specially catered for civil servants, this loan package is payable via deduction through the Biro Perkhidmatan Angkasa which comes with features like:

  1. Fast approval process
  2. loan amount of up to RM200,000
  3. loan tenure of up to 10 years
  4. profit rate of 4.35%

Bank Islam Flat Rate Personal Financing-i

The Bank Islam Flat Rate Personal Financing-i is catered solely for government employees as well as those working in GLCs and public-listed companies. This package is available for those who earn more than RM2,000 per month. Offering a flat-rate profit rate, the applicant can borrow up between RM10,000 and RM200,00 using the attractive interest rate. The term of financing is up to 10 years and there are no hidden fees involved.

Bank Rakyat Personal Financing-i Public

The Bank Rakyat Personal Financing-i Public is a loan package specifically designed for public servants. Those working in GLC companies, its subsidiaries and other public sector organizations can apply for this loan as long as you are more than 18 years of age (not more than 60) with at least 3 months active employment with the company and earning more than RM1,000 per month. The amount that you can borrow can be up to RM200,000 for a maximum term of 10 years. Depending on the payback method, it can be based on a fixed or floating rate usually between 3.8 and 4.5%.

Other forms of loans and funding

Besides the banks, there are various other organizations that offer these funds. This includes:

  1. The Graduate Entrepreneur Fund – Catered for start-up businesses for young entrepreneurs by SME Bank
  2. Young Entrepreneurs Fund – Offered by SME bank as well, this loan is used for start-ups and developed businesses
  3. Shariah-compliant SME Financing Scheme (SSFS)
  4. Fund for Small and Medium Industries 2 (FSMI2)
  5. Green Technology Financing Scheme (GTFS)
  6. Halal Industry Fund
  7. Intellectual Property Financing Fund

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