The sale of non-performing loans (NPLs) by banks is legal and forms part of standard risk management practices adopted by financial institutions, according to the Suruhanjaya Kredit Pengguna (SKP). “The sale of non-performing loans is permitted under current legislation and is a widely recognised portfolio and risk management strategy for financial institutions. SKP also encouraged borrowers facing repayment difficulties to seek assistance as early as possible rather than waiting until their loans become non-performing. According to SKP, loans are generally only classified as non-performing after borrowers experience prolonged repayment difficulties and financial institutions have exhausted their normal recovery efforts. Early engagement often provides the best opportunity to achieve a sustainable repayment solution and avoid further financial hardship,” SKP said.