Yesterday, Bank Negara Malaysia said it was unlikely that financial institutions would extend the six-month moratorium on payment of monthly instalments for vehicles and housing loans which end on Sept 1.
BNM assistant governor Adnan Zaylani Mohamad Zahid was quoted as saying that the economic recovery would continue and that “we have no intention of extending the moratorium as it would have repercussions that we want to avoid”.
Adnan’s statement is consistent with Finance Minister Tengku Zafrul Abdul Aziz’s June 28 statement that it is up to the banks if they wish to extend the loan moratorium in a targeted way.
MTUC strongly urges the Finance Ministry and BNM to pull its weight in ensuring banks extend the moratorium by at least another six months, especially for the targeted group of workers who are still unable to service the loans.
This would include many of the 800,000 workers who lost their jobs until April this year and thousands more who were forced to take deep pay cuts or go on unpaid leave by their employers.
For banks to adopt a ‘business as usual’ attitude and expect workers who are still mired in job losses and with little or no income, to resume paying their loans, is a downright cruel and inhumane act against the borrowers.
The official statistics clearly show that many workers have been rendered unemployed due to the economic downturn caused by the Covid-19 pandemic. The opening up of the economy is an ongoing albeit slow process and it will take time for workers to get back on their feet and service their loans.
There should not be any doubt on the part of the government, especially the Finance Ministry and BNM, that a large slice of the workforce is far from ready to resume servicing their car and housing loans. If the banks persist to ‘collect’, then we can expect to see record forfeitures of vehicles and homes of the working class which will inflict untold misery on them and their families.
Clearly, the MOF and BNM must not abdicate their responsibility to ensure that the moratorium is extended to another six months to all B40, M40 groups, as well as all workers who have lost their jobs irrespective of their salary scale. The same extension should also be given to companies with loan facilities who are struggling to keep afloat during this pandemic.
MTUC urges the MOF and BNM to stop mollycoddling the banks. There is no question of banks incurring losses because of the moratorium. The loans are not written off but the instalment payments merely need to *be deferred* until the economy normalises. There are no losses to speak of, merely a temporary deferment of monies that would be returned to the banks' coffers.
As such, Adnan’s claim that the six-month moratorium granted in April had cost financial institutions some RM47.5 billion is nothing more than a blatant attempt to twist the facts and pander to the interest of the financial institutions.
*If at all only a reduction in profits is possible due to loss of reinvestment interest and liquidity cost. Loss of reinvestment interest is, in any event, was inevitable given the drawback due to the pandemic. In that sense, the question of losing reinvestment interest is no justifiable cause. Therefore, what cannot be comprehended is as to how the BNM arrived at the 47.5 Billion loss arising only due to liquidity cost.*
In 2019, all the banks in Malaysia recorded multi-billion ringgit in profits, as had been the case for so many years. In facing Covid-19, both the finance minister and the BNM have repeatedly said the banking sector remained strong with more than adequate financial liquidity.
Bank Negara figures show that the banking system excess capital and liquidity stands at RM159 billion and RM199.6 billion respectively above the regulatory minimum levels. According to BNM, this has enabled banks in Malaysia to play a leading role in assisting households and businesses to recover from the Covid-19 pandemic shocks.
As attested by Bank Negara, all these point to a strong and vibrant banking sector that is easily able to grant a further six-month extension to needy Malaysians who are in dire need for it. The banks have a moral obligation to do this and both the Finance Ministry and BNM must stop making excuses for them not to do so.
It is not enough nor right for Tengku Zafrul to say that he is encouraging banks to grant the moratorium extension to targeted groups but in the same breath, claim that banks have the final say. The government and BNM have more than enough powers and clout to direct the banks to grant the extension and as such, must stop being evasive about it. If necessary, the Prime Minister Office must intervene for the sake of the rakyat.
When the six-month moratorium was first announced in March, MTUC had hailed it as the most beneficial initiative by the government to help beleaguered Malaysian workers. The moratorium had helped them tremendously in managing their tight cash flow and household expenses. This is especially true for workers who were laid off or forced to endure pay cuts.
By compelling these workers to resume paying their loan instalments from October, the banks and the government will only be destroying the goodwill and credibility they had earned thus far in the eyes of the rakyat. Extending the moratorium by a further six month will not harm the bottom line of the banks, but instead, go a long way to help the poor and downtrodden workers.
Source : https://m.malaysiakini.com/letters/532955