Bank Negara: Blanket automatic loan moratorium for all not best solution for now
KUALA LUMPUR, May 11 — Bank Negara Malaysia (BNM) said today a blanket automatic loan moratorium was not the best solution for all given the recent containment measures announced by the federal government since most economic sectors were now allowed to operate as compared to the previous year.
Responding to a question whether BNM would consider another round of moratorium given the recent containment measures announced, BNM governor Datuk Nor Shamsiah Mohd Yunus however advised borrowers requiring financial assistance to speak to their respective banks in order to obtain the most suitable assistance for their needs.
This comes after Prime Minister Tan Sri Muhyiddin Yassin announced Malaysia will enter yet another nationwide movement control order (MCO) beginning May 12 until June 7 necessitated by rapidly rising Covid-19 case numbers.
“Banks are continuing to provide repayment systems including targeted moratoriums to borrowers who have lost their job and income. This will continue as some borrowers need help given the recent MCO.
“So while the MCO has been extended, nearly all economic sectors are allowed to operate unlike the previous MCO in 2020.
“Borrowers can go through various existing channels including the Credit Counselling and Debt Management Agency (AKPK) and BNM Telelink that offers financial assistance to those who need them.
“More importantly, they are getting help that reflect their financial circumstances, so a (blanket) loan moratorium is not the best solution for all borrowers,” she said during a virtual press briefing of BNM’s Economic and Financial Developments in Malaysia in the First Quarter of 2021.
On advising borrowers to speak to their respective banks, Nor Shamsiah stressed that this was to ensure borrowers do not incur more cost or debt than necessary and can get back on their feet quicker.
According to Nor Shamsiah, a total of 1.6 million applications for repayment assistance has been facilitated by financial institutions with an approval rate of 95 per cent as of March 31 this year.
She also assured that borrowers’ CCRIS (Central Credit Reference Information System) record will not be affected by the financial assistance for the rest of the year.
In the briefing, Nor Shamsiah said outstanding household loan applications increased by 6 per cent compared to 5.4 per cent in the Fourth Quarter of 2020, with the purchase of cars and residential properties being the main drivers of household loans expansion.
“Demand for household loans remains forthcoming mid the accommodative monetary policy environment and various economic stimulus measures,” she said.
Nor Shamsiah also said the country’s banking system remained resilient and well-positioned to support the ongoing economic recovery given the strong financial buffers maintained by banks.
“The credit risk outlook however remains challenging as some borrowers continue to face challenges in meeting their financial obligations amid uneven economic recovery.
“Help continues to be available to those borrowers as banks continue to extend repayment assistance in the first quarter of 2021,” she said.
A copy of the briefing can be accessed from BNM’s website here.
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