11th October 2021 - 3 min read
The Credit Counselling and Debt Management Agency (AKPK) will set up a temporary assistance programme to help Malaysians who are still struggling financially after the expiry of various repayment aids offered under the PEMULIH economic package, said Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz.
According to minister, the programme will help to ease the credit burden of individuals as well as small and medium enterprises (SMEs) who continue to face difficulties in improving their cashflow after the end of the PEMULIH aids. Further details about the programme will be announced soon, he said, adding that borrowers will also receive financial counselling from AKPK in addition to the programme. These include proper financial planning based on the borrower’s needs, financial management training, and referrals to other agencies through the Social Synergy Network to improve the borrower’s skills and income.
“Therefore, the notion that there are those among the affected who will default in the first instance if the moratorium assistance is phased out or not implemented more broadly, such as the complete removal of the regular interest charge, is untrue,” Tengku Zafrul commented during a Parliament session today. He is referring to an earlier move to waive accrued interest for the ongoing six-month loan moratorium amid public concern.
The minister further reiterated that all banking institutions have gone the extra mile in assisting Malaysian borrowers during this difficult time, despite loans being a formal agreement that “must be honoured between the bank and the customer”. “I would also like to clarify that in implementing the current moratorium, all banking institutions have taken various measures that help to further reduce the cost of credit, especially for the most affected borrowers, and go beyond the obligations set out in the original credit agreement,” he said.
Elaborating on the matter, Tengku Zafrul said that all banks have already agreed to waive compounded interest and penalty fees on all product loans during the moratorium. Regular interest (or accrued interest) will, however, continue to be charged so that banks can still meet their other obligations, including paying interest to depositors, covering other funding costs, and offering credit to stimulate the economy.
Aside from that, banks are also allowing affected credit cardholders to convert their credit card balances to term loans at lower financing rates. “Thirdly, borrowers who apply for assistance through AKPK and are among the most affected, such as borrowers who have lost their source of income or households facing the situation of the death of a breadwinner, can receive a reduction in interest costs from banks as one of the loan restructuring assistance packages,” said Tengku Zafrul.
(Source: The Edge Markets)
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