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Wednesday, June 30, 2021

Non-interest-free moratorium just 'cosmetic financial placebo': Guan Eng

 


DAP Secretary-General Lim Guan Eng has called the recently announced six-month bank loan moratorium a “cosmetic financial placebo” that will negligibly impact banks’ earnings.

It will also not reduce borrowers’ lending costs as it is not interest-free, rendering it meaningless, he said. 

“How then does the Perikatan Nasional (PN) government’s waiver of compounded interest and later penalty fees really help borrowers paying the same interest costs whilst struggling to survive with almost no income?

“Not extending the bank loan moratorium automatically to companies, especially small and medium-sized enterprises (SMEs), will also not help to save jobs, businesses and economic livelihood during the current economic recession,” the Bagan MP said in a statement today.

Finance Minister Tengku Zafrul Abdul Aziz clarified yesterday that the six-month moratorium on bank loans announced under the Pemulih financial aid package would not be interest-free.

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

Lim compared the recent loan moratorium grant unfavourably to the first one. 

“Unlike the first loan moratorium last year, interest for hire-purchase loans is not waived.

“Credit card balances are not covered under the moratorium, but instead refinanced into term loans without affecting the interest payable.

“There are no extra savings for credit card holders and hire purchase borrowers,” he said.

Lim added that the banking industry should be willing to take a “haircut” or forgo a part of their profits.

“The banking industry can afford to do so (forgo their profits) after recording healthy after-tax profits of RM32.3 billion in 2019 and more than RM23 billion in 2020 despite the Covid-19 pandemic and (economic) recession.

“For 2021, banks continue to register good profits with Malayan Banking Bhd first-quarter net profit rising by 16.71 percent to RM2.39 billion, from RM2.05 billion last year.

“CIMB Group Holdings Bhd reported the highest first quarter after-tax profits in their history of RM2.46 billion compared to RM507.93 million in the first quarter of last year,” he said.

He called on the PN government to direct banks to share their profits and waive interest for the eight million companies and individual borrowers who qualified for the latest bank loan moratorium.

This six-month bank loan moratorium will be granted to all borrowers, regardless of their income levels. Previously, the moratorium was only reserved for those in the B40 (bottom 40 percent of income earners) bracket. - Mkini

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