HSBC Malaysia has announced that it will not be compounding the interest charged for its loans during the moratorium period mandated by Bank Negara Malaysia (BNM). According to HSBC, this extra step taken for both individual as well as small and medium enterprise (SME) customers is a proactive effort to help ease financial burdens during the Covid-19 outbreak.
“We empathise with everyone who is currently going through a challenging time here in Malaysia due to the COVID-19 outbreak and therefore we have taken the extra steps for retail and SME customers – both the interest for conventional loans as well as profit on Islamic financing will not be compounded during the moratorium period, we hope this proactive effort will help ease the financial burden of our retail and SME customers. HSBC has a long history in Malaysia and we want to continue to support the financial well-being of our communities,” HSBC said in a statement.
Yesterday, BNM announced that all banks and development financial institutions would offer an automatic deferment of six months for loan and financing repayments to SME and individuals. However, BNM highlighted that interest would still continue to accrue for both loans and Islamic financing during the deferment period, and that interest would be compounded for conventional loans.
“For conventional loans, interest will continue to be charged on the outstanding balance comprising of both principal and interest portion (i.e. compounded) during the moratorium period,” said BNM in its FAQ.
Therefore, HSBC’s move to charge only accruing and not compounding interest for conventional loans can be seen as an additional step beyond what has already been laid down by BNM.
In its post on Facebook, HSBC also informed customers who have recently applied for existing HSBC liquidity relief packages that the measures announced by BNM will supersede the current offers effective 1 April 2020. “We will be able to share more information and details of these programmes here by 1 April 2020,” said the bank.