KUALA LUMPUR: Bank Negara Malaysia’s latest measures in response to the Covid-19 pandemic are mainly to support individual and business borrowers and ensure that banks can continue to play their role to sustain the economy, bankers said.
They said measures such as a six-month payment moratorium were timely as the impact of the pandemic was far-reaching, from corporates, commercial and small- and medium-sized enterprises (SMEs) to individuals.
The Association of Banks in Malaysia (ABM) believes the moratorium is a necessary solution at this point.
“ABM members will grant, effective April 2020, an automatic extension of credit facilities in existence today for a period of six months to retail (excluding credit cards) and SME customers,” ABM said in a statement.
It said while interest would accrue, there would be no payment of interest and principal required for credit facilities for the six months.
“As for the segments other than these, the moratorium will apply on a case-to-case basis and customers should be in touch with their bankers to discuss the specific relief sought,” said ABM chairman Datuk Abdul Farid Alias.
Farid hoped the moratorium would provide customers some breathing space and allow them to focus on other critical aspects of their lives.
The Association of Islamic Banking and Financial Institutions Malaysia president Datuk Adissadikin Ali said unlike demand or supply shock that had led to a global economic crisis, the pandemic affected both sides of the equation.
He said while availability of capital or liquidity was not in question, unavailability of labour due to the movement control order had adversely affected the economy from the supply side.
“At this time, taking into consideration the difficulty for people, especially the ones without fixed monthly pay or the ones who lost their job for whatever reason, this payment holiday period shall give a breathing space to all before things go back to normal.
“This shall avoid incidences of a spike in non-performing loans (NPLs) in the banking industry. High incidences of NPLs could affect the lending ability of banks, thus further dampening the economic growth ability.”
CIMB Group Holdings Bhd group officer in charge Omar Siddiq said banks were fully supportive of the new measures.
“Clearly, CIMB is able to take this approach given the strength of our banking system and we will continue to balance prudence with innovation to ensure that we are flexible at all times.”
Public Bank managing director and chief executive officer Tan Sri Tay Ah Lek said the automatic approach would enable banks to process the moratoriums more efficiently to ensure immediate relief to those most in need.
“We have confidence that these measures will speed up the recovery curve for the country once the pandemic is arrested and help economic activity to accelerate without any hindrance.”
RHB Investment Bank Bhd head of regional banks, equity research, Fiona Leong said the measures were well balanced.
“Besides the vulnerable retail and SME segments, banks are encouraged to extend assistance to corporates.
“In return, Bank Negara dialled down on certain regulatory requirements to provide liquidity and contain the potential rise in government investment issues,” Leong told the New Straits Times yesterday.
Recently, several banks had offered customers the flexibility to defer loan repayments (with their own terms and conditions) in light of the health crisis but the new ruling by Bank Negara technically supersedes those initiatives.
Alliance Bank Malaysia Bhd group chief executive officer Joel Kornreich said in addition to the six-month loan moratorium, the bank was helping customers to restructure and reschedule their payments over the longer term if required.
“In support of Bank Negara’s Special Relief Facility, Alliance Bank is among the first banks to make available an immediate collateral-free financing facility of up to RM1 million per company.
“We have approved close to RM200 million in financing to businesses and consumers under these financial relief initiatives.”