Loan repayment deferment measures for households and SMEs

Bank Negara Malaysia

KUCHING, March 25: Banking institutions will offer a deferment on all loan or financing repayments for a period of six months, with effect from April 1, to ease the cash flow of individuals and small and medium-sized enterprises (SMEs) that are likely to be the most affected by the Covid-19 pandemic.

This offer is applicable to performing loans, denominated in Malaysian Ringgit, that have not been in arrears for more than 90 days as at April 1.

For credit card facilities, banking institutions will offer to convert the outstanding balances into a three-year term loan with reduced interest rates to help borrowers better manage their debt.

These are among regulatory and supervisory measures announced by Bank Negara Malaysia (BNM) to support efforts by banking institutions to assist individuals, SMEs and corporations to manage the impact of the Covid-19 outbreak.

However, it is important to note that the interest or profit will continue to accrue on loan or financing repayments that are deferred and borrowers will need to honour the deferred repayments in the future.

“Borrowers should therefore ensure that they understand and discuss with their banking institutions on the options available to resume their scheduled repayments after the deferment period.

“Individuals and SMEs that do not wish or need to avail of these flexibilities can continue with their current repayment structures,” BNM disclosed in a media release today.

These measures, BNM emphasised, will allow banking institutions to remain focused on supporting the economy during these ‘exceptional and unprecedented’ circumstances, by providing flexibility for banking institutions to respond swiftly to the needs of their customers.

“Banking institutions are well-positioned to do so, given the large financial buffers that have been built up over the years,” the institution added.

As for corporations, banking institutions will also facilitate requests by corporations to defer or restructure their loans or financing repayments in a way that will enable viable corporations to preserve jobs and swiftly resume economic activities when conditions improve.

BNM advised corporations to approach their banking institutions to discuss their repayment plans and the restructuring of credit facilities.

“BNM has provided appropriate time-bound flexibilities for banking institutions to report deferred or restructured facilities in the Central Credit Reference Information System (CCRIS), taking into account the temporary nature of disruptions faced by borrowers or customers,” it added. — DayakDaily