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Malaysia – Bank Negara: Aid for borrowers until next year
KUALA LUMPUR: Repayment assistance will remain available this year and into 2021 for borrowers whose incomes have been affected by the Covid-19 pandemic.
In a statement, Bank Negara said borrowers facing challenges have generally requested for reductions in monthly repayment installments or an extension of the moratorium, depending on circumstances.
“Borrowers who have declined repayment assistance for now can still apply for targeted assistance throughout 2020 and into 2021 if their financial circumstances change, ” it said.
Bank Negara said the scale of targeted repayment assistance was unprecedented in Malaysia’s banking history.
It gave an assurance that assistance would continue to be offered to borrowers across a range of income groups, with special consideration given to households from the B40 category, micro businesses as well as borrowers affected by movement restrictions.
A targeted approach to repayment assistance extends relief measures more sustainably, while lending strength to the economic recovery.
It said many borrowers have now started to resume repayments. For this group, resuming repayments would be in their interest as this would reduce the overall cost of borrowings. If their financial circumstances change down the road, targeted repayment assistance would still be available.
It also said borrowers who require assistance at this time can customise their repayment plans based on what they can afford.
“If their circumstances are further challenged in the future, they would have more recent repayment records to facilitate further assistance by banks, ” it said.
The financial resources of the banking system can be prioritised to help those most affected by Covid-19. As more borrowers who can afford to repay do so, more assistance can be made available to borrowers who need it.
The public, as depositors, expect that banks discharge their fiduciary obligation by managing these funds prudently and use them to provide loans to the economy for productive purposes, Bank Negara said.
In addition, banks source capital from institutional funds, such as those managing pensions, retirement funds and investments of Malaysians. It is therefore important to preserve a healthy credit culture where borrowers who can afford to repay do so.
Bank Negara said more than 640,000 applications for repayment assistance have been received, with an approval rate of around 98%. The types of packages offered by banks reflect the financial needs and circumstances of the borrowers.
Of those approved, it said 40% were granted an extension of the moratorium. These consisted mainly of individuals who have become recently unemployed, as well as businesses in sectors that may still be experiencing significant operating constraints caused by the pandemic.
The other 60% received a reduction in installments. Borrowers who have requested a reduction in installments include those in the B40 group. These installment reductions put individuals and SMEs on a path to start paying down their loans, at levels which they are comfortable with.
Among individuals who requested repayment assistance to date, about 50% have a monthly income of RM5,000 or less.
Meanwhile, 28% are those with a monthly income between RM5,000 to RM10,000.
Borrowers in other segments who need assistance are also being supported, including those who earn variable incomes, and those employed in sectors that have been hardest hit such as the tourism sector.
“Applications for repayment assistance at any time before June 30,2021 will also not appear on a borrower’s CCRIS records.
“There are no processing fees or charges associated with applications for repayment assistance for individual and SME borrowers. To obtain the targeted assistance, borrowers need to apply directly to their respective banks, ” it said.
Source: https://www.thestar.com.my/business/business-news/2020/10/20/bank-negara-aid-for-borrowers-until-next-year