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Bank Negara Malaysia (BNM) made the decision to grant an automatic moratorium on loan payments for 6 months following the economic slowdown ailed by the Covid-19 pandemic.
While BNM’s decision was only on the deferment of loan payments itself, some banks have announced that they will not be compounding interest to help alleviate the financial burden of their customers.
Compound interest is the addition of interest to the principal sum of a loan or deposit, meaning interest on interest.
Here’s the full list of banks that won’t charge interest for the 6-month loan break along with some important details:
No compounding interest for retail and SME customers, taking effect from 1st April.
For Islamic financing, RHB will continue to observe the principle of no compounding of profit.
The loan moratorium applies automatically to all RHB Bank and RHB Islamic Retail and SME customers, with the exception of loans/financing facilities that are in arrears exceeding 90 days as at April 1.
Interest on conventional loans will not be compounded during the moratorium period.
Profit for Islamic financing is not compounded but the interest/profit on the deferred loan and financing repayments will continue to accrue during the 6-month period.
No compound interest for the monthly installment payments of loans to all eligible individual and business customers.
For Islamic financing, profit will continue to accrue on the outstanding principal amount it will not be compounded in accordance with Shariah principles.
No compounding interest for all individual, small and medium enterprise (SME) and non-retail and corporate customers loan facilities.
Eligible products for retail & SME customers under the moratorium include personal, mortgage, ASB, education and SME loans.
OCBC said it will not be compounding interest and profit on mortgages and loans for SMEs during the period.
HSBC Malaysia announced non-compounded interest or profit during the moratorium period for retail and SME customers.
No compounding interest or profit on loans and financing, including AmBank Islamic.
No compounding interest and profit for term loans and term financing for retail and SME customers.
Under Affin Islamic, profit rates are already not compounded in line with Shariah principles.
Standard Chartered Bank
No compounding interest on its conventional loans while profit on Islamic financing by Standard Chartered Saadiq will not be compounded.
Products included in the automatic loan deferment programme are:
- personal loans/personal financing-i
- residential mortgage/Saadiq MyHome-i or Saadiq MyHomeOne-i
- commercial mortgage loan/BizProperty Equity-i
- business installment loan/guaranteed instalment loans/biz-financing-i
Compounded interest and profit on its deferred loan and financing repayments are waived.
Eligible Islamic and conventional products under this moratorium include ASB Financing, home financing, auto financing and personal financing (Express Cash, Cash Plus Loan and Awam-i).
For SME customers, the moratorium applies to all existing term loans/financings and industrial hire purchase.
Hong Leong Bank
There will be no compounding of interest/profit for deferred repayments for the bank’s customers.
This applies to all loans and financing for SMEs and individuals, including:
- car loan
- housing loan
- personal loans/financing
- Amanah Saham Bumiputra (ASB) financing
- Pension financing
- MyCoop loans/financing
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