FM: Moratorium not interest free, but banks told to waive compounded interest

 

The six-month moratorium on bank loans announced by Putrajaya yesterday would not be interest free, according to Finance Minister Tengku Zafrul Abdul Aziz.

However, he has asked banks to waive compounded interest and late penalty fees.

Zafrul said this after a press conference to detail aid under the Pemulih package this afternoon.

Earlier during the presser - which Malaysiakini attended virtually - Zafrul said the moratorium was "not interest free".

"I am saying that this moratorium is the same as before. It is not interest free.

"By definition, moratorium is deferment of loan repayment," he said.

However, after the press conference ended, Zafrul left the room and came back with some additional info.

"I have requested the banks, no compounded interests, no penalty," he told media that were physically present.

Malaysiakini received a recording of the post-press conference presser.

Interest is applied on the amount borrowed, whereas compounded interest is applied on the interest accrued while the repayment is deferred.

Zafrul told the media he initially did not speak about the waiver at his virtual presser as Bank Negara was expected to issue an official announcement soon.

Yesterday, Prime Minister Muhyiddin Yassin announced a RM150 billion financial aid package called Pemulih (National People's Well-Being and Economic Recovery Package).

It includes a six-month bank loan moratorium that will be granted to all borrowers, regardless of their income levels. Previously, the moratorium was only reserved for the B40 (bottom 40 percent of income earners).

However, several quarters raised concerns on additional terms for the moratorium and questioned if borrowers would be subjected to additional charges by banks.

Meanwhile, during the press conference, Zafrul said it is still up to the borrower and their respective banks to discuss the details of the loans.

According to him, Putrajaya's main focus with the moratorium was to assist the rakyat who are severely affected by the Covid-19 pandemic, so they can better manage their cash flow.

"When we go to the ground, this is the request we received from the people. They wanted a moratorium, so we went to the banks and asked them to help and make it simple.

"So now what the people need to do is only to apply either online, by phone, or visit the bank branch and they will get automatic approval. No questions asked. No need to fill any form," he said. - Mkini