MCO 3.0: Bank Negara not in favour of blanket loan moratorium

 

A blanket loan moratorium may not be the best solution for borrowers following the re-imposition of the movement control order (MCO) nationwide.

Instead, they should approach banks to help them meet their debt obligations, Bank Negara Malaysia (BNM) said.

Governor Nor Shamsiah Mohd Yunus said all banks already have their payment assistance plans, including targeted loan moratoriums, which can be offered to borrowers who have lost their jobs or suffered a reduction in income.

“Borrowers can also approach multiple channels that have been set up, including BNM’s Credit Counselling and Debt Management Agency (AKPK), if they require advice or further assistance.

“More importantly, borrowers are getting the help that reflects their specific financial circumstances so that they will not incur more cost or debt than necessary and can get back on their feet faster.

“So loan moratoriums, in this respect, may not be the best solution for all borrowers,” she told reporters following the release of Malaysia’s first-quarter 2021 Gross Domestic Product performance today.

Nor Shamsiah was responding to questions on whether the central bank would consider another round of moratorium after the government announced the nationwide MCO 3.0 from May 12 until June 7 due to the increasing number of new Covid-19 cases daily.

Despite the extension of the MCO, nearly all economic sectors are allowed to operate unlike in the previous MCO in 2020, she said.

The governor urged borrowers to engage with banks completely so that banks can find the right help and advice to suit their circumstances and in their best interest.

She said up to March 21 this year, banks had facilitated 1.6 million applications for repayment assistance with an approval rate of 95 percent.

According to her, BNM and AKPK have also supported over 47,000 borrowers to help them meet their debt obligations with their banks.

“Our resources will continue to be mobilised to assist borrowers throughout this challenging period,” she said.

She also gave assurance that borrowers’ Central Credit Reference Information System (CCRIS) record will not be affected by the assistance for the rest of the year.

Nor Shamsiah said the government has fiscal space to introduce more stimulus packages to revive and shore up the economy due to the pandemic as the statutory debt stood below the ceiling of 60 percent of GDP accorded by the Covid-19 Act.

She noted that the government's statutory debt was expected to stand at around 58.2 percent of the GDP by end of this year with the announcement of the Strategic Programme to Empower the People and Economy (Pemerkasa).

"The government has reiterated its intention to build fiscal buffers that have been utilised during the pandemic once we recover from the crisis," she added.

- Bernama