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What is Koperasi Loan & How is it Different from a Commercial Bank Loan?

(This article was originally published on the 17th of September 2017 and updated on the 13th of November 2019). 

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A Koperasi Loan or Cooperative Loan is a type of personal loan offered to civil servants working in a federal or state government, municipal councils, statutory bodies as well as employees of selected government-linked entities. The repayment of Koperasi Loan is done through a salary deduction repayment scheme via Biro ANGKASA. Most of the Koperasi Loans are Syariah compliance.

Cooperatives that offer Koperasi Loan includes Koperasi UkhwahKoperasi Putri Terbilang (KOPUTRI)Koperasi Bersatu Tenaga Malaysia Berhad (KOBETA), Co-op Bank Pertama dan Koperasi Gemilang.  These cooperatives are registered under the Co-operatives Societies Act 1993.

Besides cooperatives, there are also ‘Yayasan’ or foundation that offers personal loans to civil servants. An example would be Yayasan Ihsan Rakyat or Yayasan Dewan Perniagaan Melayu Perlis. While Yayasan is not a co-operative, the personal loan offered by Yayasan has some similar features as Koperasi Loan, this includes the loan repayment is processed through a salary deduction repayment scheme.

There are also certain banks and local entities which partner together (e.g. Public Bank-MCCM Resources and RHB-iDestinasi) that provides personal loan with a salary deduction repayment scheme via Biro ANGKASA.

Key Features of Koperasi Loan

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  • Loan repayment is conducted through direct salary deduction via Biro ANGKASA or Accountant General; these two agencies have the mandate from the government to be able to make deduction from civil servants’ salary income. This is the reason why Koperasi Loan is offered to civil servants only.
  • The total financing amount ranges from RM2,000 (minimum) to RM250,000 (maximum).
  • The maximum financing tenure is 10 years or until retirement, whichever is shorter.
  • Generally unsecured with no guarantor required.
  • Most of the Koperasi Loan is offered to civil servants with full time permanent job status.  Only a few co-operative that offers personal loan to contract status workers
  • The salary deduction allowed for Koperasi Loan cannot exceed 60% of the gross income. This means that in the salary slip of civil servants, the percentage of net income should be at least 40%.
  • Offers a multi-purpose loan which includes debt consolidation and loan restructuring, buying a home or car, starting or expanding a business, education, medical bills, etc.

Difference between Koperasi Loan and Commercial Bank Personal Loan


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Although similar in many ways to a personal bank loan, a Koperasi Loan has a few distinct features:

1. Repayment– Koperasi Loan repayment is directly deducted from a borrower’s salary and processed by either the Angkatan Koperasi Kebangsaan Malaysia Berhad (Biro ANGKASA) or Accountant General’s (AG) department. A Commercial Bank Personal Loan is usually processed through auto debit or manual cash bank-in, although some banks also offer personal loan through salary deduction.

2. Tenure– The tenure for Koperasi Loan is typically up to 10 years, whereas most Commercial Bank Loan tenure is generally within 5 – 7 years.

3. Credit Criteria– Since repayment is made via direct salary deductions, the credit approval criteria for a Koperasi Loan is less stringent compared to personal loan from a commercial bank. A Koperasi Loan can even be approved for borrowers with a negative CTOS record, high commitment or those marked with a ‘special attention account’ in CCRIS.  Learn more about what is CTOS and CCRIS.

4. Interest Rate & Payout– A Koperasi Loan interest rate is typically lower compared to the rate from a commercial bank. However, one will need to be aware of the payout amount of a Koperasi Loan, as many do not disburse 100% of the loan amount to borrowers.  A loan that is of low interest is not necessary the cheapest for borrowers, if the Koperasi Loan also offers a low payout rate. The payout can range from 70% to 98% depending on the cooperative itself. Therefore, it is important to know not just the interest rate but also the amount of cash in hand when deciding whether to take up a Koperasi Loan.

5. Type of Applicant– A Koperasi Loan is restricted to civil servants while a bank loan is open to private sector employees, self-employed as well as public sector employees.

Read next on the 3 Reasons to Use Koperasi loan

This article is prepared by Direct Lending, an online personal lending platform with the mission to provide simple, safe and affordable financing to all hardworking adults. We help borrowers to find, apply and receive financing that most suit them. Our service is 100% free. Check your eligibility today.

Tips from Direct Lending: A legitimate lender will never ask you to pay anything before you receive the loan. If there are any fees, insurance, stamp duty required for the loan, these fees will always be deducted from your loan amount before disbursement instead of being paid by you directly.

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