BNM Governor: Economy Cannot Be Helped By Blanket Loan Moratorium Alone

Jacie Tan

15th February 2021 - 2 min read

(Image: The Star)

Bank Negara Malaysia (BNM) governor Datuk Nor Shamsiah Mohd Yunus stated that is a “fallacy” to think that the economy can only be helped by the implementation of an automatic loan moratorium alone.

Speaking at a press conference on the release of Malaysia’s Q4 gross domestic product (GDP) data, Nor Shamsiah said that a blanket loan moratorium is not the remedy to current economic problems. Nonetheless, the BNM director highlighted that help has never stopped for those in need of it, with loan repayment assistance and moratorium extensions being made readily available.

According to Nor Shamsiah, 1.4 million borrowers so far have applied for repayment assistance, with a 95% approval rate. It was found that 45% of borrowers opted to reduce their monthly instalments rather than request a moratorium.

“This is observed for households and borrowers in lower-income segments, or the B40 group. This suggests that borrowers are making informed choices on managing their debt, based on what they can afford,” she said. “So they are not asking for a moratorium, they do not want a one-size-fits-all solution. What they want is tailored assistance that meets their financial circumstances.”

Nor Shamsiah opined that a more targeted approach is appropriate as it puts the choice in the hands of the borrowers, allowing them to make informed decisions based on their own financial conditions. Moreover, while there are still some who have trouble with loan repayments, the vast majority of borrowers have resumed their repayments – with some doing so even before the automatic moratorium ended last year. The value of repayments has reached levels seen before last year’s MCO, she noted.

On top of that, the BNM director pointed out that another round of automatic loan moratorium would erode banks’ buffers and make it more difficult for new loans to be obtained. Malaysians are also affected by the profitability of banks directly through their bank deposits or indirectly through funds like the EPF.

(Source: The Edge Markets)

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