The Hire Purchase (Amendment) Act 2026 took effect on 1 June 2026. For development financial institutions, one of the most significant changes is that HP agreements, including equipment financing documentation, can now be executed using electronic or digital signatures.

DFIs serving SME borrowers across remote and rural territories have long faced extended turnaround times due to physical verification and paper-based signing requirements. The new Act opens a digital path for these workflows.

What you need to know:

✅ Electronic and digital signatures are now legally valid for HP agreements, including equipment financing docs, corporate guarantees, and settlement forms.
✅ EIR disclosure is mandatory under the new reducing balance method.
✅ Identity verification is mandatory before entering into a hire purchase agreement.
✅ Physical presence is still required for initial HP signing under BNM guidance (ECA 2006), but the overall document workflow can now be digitized.
✅ Rule of 78 and flat-rate interest calculations are abolished.
✅ Digital document execution can reduce processing time for equipment financing, even where physical presence is required for initial signing.

Grace period ends March 2027.