Thursday, January 21, 2021

Banking on an extension: Anxious borrowers seek relief as moratorium ends

Checks show banks have been willing to extend repayment periods as well as to restructure loans.

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The end of the six-month loan moratorium this week means that millions of Malaysians will be starting their repayments to banks again, many without a full-time job to service their loans.

The movement control order (MCO) to contain the Covid-19 pandemic caused businesses to falter or suspend operations entirely, with retrenchments among many drastic cost-cutting measures taken by companies.

To cushion the impact of the lockdown on people’s income, the government announced a suspension of loans from April 1 to Sept 30.

The moratorium, although welcomed, failed to take into account whether the pandemic would abate come October.

As such, banks have announced measures that could allow borrowers to extend their moratorium.

Several long-term borrowers met by MalaysiaNow said they were unable to meet their monthly financial commitments including car and housing loans, on top of other expenses.

Salbiah, 36, waiting her turn to meet an officer at a bank in Kuala Lumpur, is among tens of thousands who lost their job during the MCO.

“So I came to the bank to ask for the moratorium to be extended as I have no fixed income to pay for these loans with the bank,” she told MalaysiaNow.

Another borrower was relieved by the bank’s initiative to extend the repayment period by restructuring his car and home loans.

“Even though I am still employed, my salary has been cut a lot, so I hope my application for loan repayment assistance will be accepted, otherwise life will be difficult for me,” said Ibrahim, 41.

The deadline to apply for an extension of the moratorium ended on Sept 30.

But MalaysiaNow understands that most banks have extended the deadline until the end of the year in view of the huge number of borrowers facing financial problems.

And the recent spike in Covid-19 cases means that banks are taking health SOPs seriously.

Eligible applicants include those who lost their jobs this year – they will be given a further three-month extension of the moratorium.

Others who may apply for repayment assistance include those who have had their salaries cut as a result of the pandemic’s impact on business.

Many banks are also offering instalment repayment reductions in line with borrowers’ salary reduction rate, for a minimum period of six months.

Customers who have hire purchase facilities are also offered appropriate instalment scheduling options subject to the Hire Purchase Act, such as an extension of the instalment payment period at a lower monthly instalment rate.

According to Bank Negara Malaysia, as of July 20 this year, more than 7.7 million individual borrowers, or 93% of all borrowers, had benefitted from the loan repayment moratorium worth RM38.3 billion.

During the same period, 243,000 SMEs or 95% of all SME borrowers benefitted from the moratorium with a value of RM20.7 billion.

Last month, Prime Minister Muhyiddin Yassin, announcing the latest economic stimulus package, Kita Prihatin, said 98% of applications for an extended moratorium and targeted bank assistance were approved.

As of Sept 11, banks had contacted 1.4 million of the two million borrowers, more than 380,000 of whom requested loan repayment assistance.

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