Loan Moratorium EXTENSION. How flexible is that? How & when to apply?

Ahead of the blanket moratorium ending on 30 September 2020, our PM today announced that a more targeted approach to assist individual and SME borrowers, which is in line with the easing of movement controls since early May.

It is recognised that income and cashflow challenges remain for some, especially those who have lost their jobs or experienced a reduction in incomes.

Because of that, a targeted approach was introduced to ensure that the financial resources and attention are prioritised where it is needed the most.

The banking industry will provide a targeted moratorium extension and provision of repayment flexibility as follows:

• Individuals who have lost their jobs in 2020 and have yet to find a job will be offered an extension of the loan moratorium for a further 3 months by their bank.

  
  
• Individuals who are still in employment but whose salaries have been affected due to COVID-19 will be offered a reduction in loan installment in proportion to their salary reduction, depending on the type of financing.

  
  

  Banks will offer flexibility for a period of at least 6 months. Banks will also consider extending the flexibility at the end of that period, bearing in mind the salary of the borrower at that time.

For hire purchase financing, affected borrowers will be offered revised installment schedules that are consistent with the Hire-Purchase Act 1967.

In addition, banks have also committed to provide repayment flexibility to other individuals and all SME borrowers affected by COVID-19.

The flexibility offered by each bank will take into account the specific circumstances of borrowers. This includes:

• Allowing borrowers to pay only the interest portion of the loan over a period of time;
• Lengthening the overall period of the loan to reduce monthly installments; or
• Providing other forms of flexibility until a borrower is in a more stable position to resume repayments in full.

All other borrowers who have the means should start to repay as it will reduce their overall debt and borrowing cost.

How to apply?

To obtain these flexibilities, borrowers need to apply directly to their respective banks beginning 7 August 2020. BNM has communicated to the banks to deliver a simplified application and documentation process for borrowers.

In recognition of these exceptional circumstances, the flexibilities provided to borrowers during this period will not appear in the CCRIS reports of borrowers.

To ease concerns of borrowers with loans from multiple banks, they may also approach the relevant “one-stop" centre to work out an appropriate assistance package:

• For individuals, Agensi Kaunseling dan Pengurusan Kredit (AKPK)
• For SMEs, Small Debt Resolution Scheme (SDRS)

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