BATU PAHAT: Community credit (KK) companies that are identified acting as 'Ah Long' (illegal money lender) when dealing with borrowers will face stern actions including having their operating licenses revoked.

Housing and Local Government Minister Datuk Zuraida Kamaruddin said KK companies which were allowed to operate from June 23, are valid entities under the law to issue loans.

"(We) are not encouraging the taking out of loans but it is actually a necessity. Our record also shows no KK companies to date have deviated in terms of their operations.

"We will withdraw their licenses if there are reports of them behaving like Ah Longs. We will stop their operations," she told reporters after a working visit to the Batu Pahat Municipal Council (MPBP) here, today.

On the operations of KK, Zuraida said the government wants to protect borrowers especially the small borrowers who had no other options.

"Why allow the credit community to operate during the Movement Control Order (MCO) 3.0? This is because we want to protect the small borrowers who sometimes want to borrow RM300, RM500 to put up a 'nasi lemak' stall and others.

"They have no place to borrow, they can't borrow from banks as they don't some go to Ah Longs.

"So, there are laws under KK, the borrowers are protected by the laws," she said adding if borrowers defaulted or are late in paying their loans, the laws would give them time to settle their outstanding loans.

As such, Zuraida said the government allowed the KK companies to operate because there was a demand from the public.

Until May 31 this year, the number of KK companies that were licensed nationwide stood at 4,972 of which 3,226 were licensed by the Housing and Local Government Ministry (KPKT) Registrar while 1,566 permits were issued by the Deputy Registrar in Sarawak, Sabah and the Federal Territory of Labuan.

On the working visit today, Zuraida, in principle approved an allocation of RM2 million to MPBP to upgrade hawker centres, tourism infrastructure and areas identified as high risks for accidents and floods.