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Malaysia: Loan repayment moratorium won’t be extended, say banking sources
KUALA LUMPUR, July 21 — The loan repayment moratorium will end as scheduled in September and will not be extended, according to industry sources.
They told The Star that banks would instead help borrowers restructure their existing debt and adjust their repayment schedules once the initiative has ended.
“It is estimated that there will be three million borrowers who will take that offer up,” one source was quoted as saying.
The sources asserted that the moratorium was not being extended preferred that customers actively restructure their loans instead as needed instead of the current blanket approach.
“The banks will have until the middle of next year to restructure and reschedule their loans,” another source said.
In March, Prime Minister Tan Sri Muhyiddin Yassin announced the six-month moratorium on loan repayments ending September 30, in order to relieve the burden of people who are directly affected by the impact of Covid-19 pandemic.
Loan repayments during this period need not be paid but borrowers that take up the scheme will accrue additional interest.
Groups such as the Malaysians Trades Union Congress (MTUC) have urged the government to extend the moratorium at least for Malaysians in the Bottom and Middle 40th per centile (B40, M40) to alleviate the financial pressure that was expected to rise with the economic slowdown.
The Federation of Malaysian Manufacturers has also called for a similar extension, saying it would give businesses some breathing space to avoid possible job cuts and accelerate the country’s recovery.
In The Star report today, MIDF Research chief Imran Yassin Md Yusof predicted that non-performing loans would also increase once the moratorium period was ended.
“Nevertheless, we expect the banks would have identified potential troubled borrowers and would have put a lot of effort in restructuring and rescheduling these potentially troubled loans and this may moderate the level of NPLs,” he told StarBiz.
Bank Negara Malaysia also acknowledged previously that the NPLs would “naturally” rise post-moratorium.
Economists previously told Malay Mail that they believed Malaysia’s banking industry was sufficiently robust to take an extension of the repayment moratorium, but they had suggested that this be targeted instead of automatic.
Source: https://www.malaymail.com/news/malaysia/2020/07/21/loan-repayment-moratorium-wont-be-extended-say-banking-sources/1886452