LOAN MORATORIUM AGAIN - THANK YOU. ANTICIPATING COMPLICATIONS - BANK NEGARA PLEASE ANTICIPATE PROBLEMS NOW

 

May I express my gratitude to YAB Perdana Menteri who has announced another SIX months loan moratorium.

My suggestion is that this new SIX month loan moratorium be extended to all borrowers - individual as well as companies.  Right now it covers individuals and SMEs only.

I foresee some arithmetic problems.

Last year there was that first SIX months moratorium. The banks had to recalculate the loan schedules, the amounts owing, interest compunded etc. 

The  pen_pu Islamic bankers had a quick lesson on how to be Shylock the Jewish moneylender !!

Yes all the recalculations can be done instantly with a few key strokes on the bank's main frame computers. No need for extra budgets, extra staff etc. It is not a difficult thing.

But Bank Negara must please ensure that ALL the banks adopt the same methods of recalculating and rescheduling the loans. Especially the Islamic banks.

Make sure for a standard loan, the recalculation of principle amounts, interest compounded, calculation of redemption amounts (or current amounts owing for immediate settlement) are all calculated exactly the same way across all the banks.

There is another complication. Late last year and early 2021 the banks made other follow up offers (thank you very much) which were taken up by many borrowers.

After the end of the SIX MONTH'S moratorium the banks then offered to reduce the monthly instalment amounts by a certain portion for TWO years (24 months). 

For example if your monthly instalment was RM5,000 the banks gave a reduction to pay only RM3,000 for the next 24 months. After 24 months are over, the loan schedule will go back to the original RM5,000 monthly instalment. 

The Banks have already issued Letters of Offer in black and white for these 'lower monthly instalments' which have been accepted by many borrowers. 

My question is NOW WITH THIS NEW LOAN MORATORIUM OF SIX MONTHS, what happens to that TWO YEAR period where the monthly instalments have already been reduced?  

By all logic and fairness this new SIX MONTHS moratorium must be outside any other term offers that have already been agreed between borrowers and Banks.

This is not a very complicated matter.   But this is Malaysia. Things can go haywire. 

We spoke to our bank about this and they were not very clear. It is understandable because the announcement is still fresh.  

Bank Negara has to sit down with the banks and dictate common and simple methods to calculate the principle amounts, interest compounded, redemption amounts, rescheduling etc of the loans after all the moratoriums, the extensions or rescheduled monthly payments etc. 

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.