Extra 3-month loan repayment moratorium only for those who lost jobs

KUALA LUMPUR, 29 July 2020:

Prime Minister Tan Sri Muhyiddin Yassin today announced the extension of loan repayment moratorium by three months for those who have lost their jobs in 2020 – due to the fallout from the Covid-19 pandemic and have yet to secure employment – while a targeted approach will be undertaken for the rest.

After the three months, the moratorium period could be extended by the respective banks according to individual situations, he said.

“This decision was made after discussing with the Finance Ministry and the Bank Negara Malaysia governor,” Muhyiddin said in the announcement telecast live.

The country’s unemployment rate hit 5.3% in May, affecting 826,100 people.

The government’s Wage Subsidy Programme has helped to safeguard 2.4 million jobs. As of June 19, RM4.89 billion had been approved for 303,596 employers for the benefit of over 2.4 million workers.

The government also announced a six-month moratorium period from April 1 to Sept 30, under its PRIHATIN Rakyat Economic Stimulus Package to cushion the pandemic impact.

As of July 20, the deferred loan/financing repayments under the moratorium were estimated to have reached RM59 billion, benefiting some 7.7 million Malaysians or 93% of individual borrowers.

Muhyiddin said for individuals who were still employed but whose salaries were affected or reduced due to Covid-19, their monthly instalment payments would be lowered in tandem with the salary reduction – depending on the type of loan taken.

“For example, for housing or personal loans, the monthly instalments would be reduced at the same rate as the drop in salary. The assistance will be given for a period of at least six months and an extension may be given subject to the salary situation of the respective individuals.”

In addition, banks have given their commitment to assist all individual borrowers or small and medium enterprises (SMEs) — business operators, petty traders or the self-employed — who are also affected by Covid-19.

Depending on the borrowers’ situation, the assistance being offered includes requiring only the payment of the interest for a prescribed period, extending the period of the overall repayment to reduce the amount of monthly payments, or giving other discharges until borrowers achieve a more stable financial footing.

For hire purchase loans, banks will also offer suitable payment rescheduling options subject to the Hire-Purchase Act 1967, such as extending the repayment period with a lower monthly instalment payment.

“These measures are expected to benefit three million individuals and SMEs. If there are more who need assistance, banking institutions have given their commitment to consider the appropriate assistance.

“Therefore, eligible borrowers can contact their banks to make an application starting 7 Aug 2020.”

The number of individual borrowers who continue to repay loan installments and opt-out of the moratorium facility increased to 601,000 in July 2020 from 331,000 in April, Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz said.

“Meanwhile, the number of small and medium enterprise (SME) borrowers who choose not to take this facility has increased to 13,000 in July from 5,000 in the same period.

“As we have never experienced this quagmire before, the government also wants to avoid a situation where borrowers face continuous financial constraints when the general moratorium ends on Sept 30.

“For those who can afford it, loan repayment must be continued from Oct 1, 2020 to restore a sustainable capital cycle and the country’s economic growth.”

– Bernama