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How Bank Negara’s Moratorium Affects Your Loans During Covid-19 Pandemic

How Bank Negara’s Moratorium Affects Your Loans During Covid-19 Pandemic

Kirat Kaur

With the COVID-19 pandemic along with movement control order (MCO) slowing down the economy and affecting incomes across the nation, Bank Negara Malaysia (BNM) has announced an automatic 6 month moratorium on all bank loans.

BNM stated that this measure was designed to ease the cash flow of small and medium-sized enterprises and individuals that are likely to be most affected by Covid-19.

Credit: Bank Negara Malaysia

Here’s what you need to know

All bank loans, financing repayments/payments, principal and interest -except for credit card payments- do not need to be made by those affected by the Covid-19 outbreak, beginning 1st April 2020. As the moratorium applies to all financing payments, this includes housing loans, car loans and personal loans

This does not mean that the payments are forgiven, but postponed until September 2020. So loan payments will continue from October 2020 onwards.

While there is no payment deferment for credit card debt, your credit balance can be converted to a term loan/financing tenure of 3 years with an interest rate of maximum 13% a year.

Qualifying criteria

For individuals and SMEs, the deferment automatically applies to loans/financing that meet these criteria:

  • not in arrears (overdue) exceeding 90 days as at 1 April 2020
  • denominated in Malaysian Ringgit.

This flexibility is offered by all licensed banks, licensed Islamic banks and prescribed development financial institutions (DFIs) regulated by BNM.

Application

Since the loan deferment is automatic, there is no need to make an application.

Banking institutions will notify individuals and SME borrowers/customers with adequate information on their loan/financing deferments under this scheme.

You’ll be notified through appropriate channels (like SMS) and the information will also be published on the banking institutions’ websites.

If the loan is automatically deducted from your salary, you can notify your company to stop the salary deduction and contact the bank to inform them as well.

Opting out

To opt out of the automatic deferment package, you should contact your bank.

You should also respond to the notification sent by the bank. Otherwise, the bank automatically will stop the repayment requirement if there is no response.

You can also continue to make timely and full repayment of your loan/financing.

Interest & Penalties

During this period, borrowers with loan/financing that meet the conditions do not need to make any repayment, and no late payment charges or penalties will be imposed.

However, interest/profit will continue to accrue on loan/financing repayments that are deferred and borrowers/customers will need to honour the deferred repayments in the future.


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