25th March 2020 - 9 min read
Bank Negara Malaysia has announced several loan repayment deferment measures for households and small and medium-sized enterprises (SMEs) to manage the impact of the Covid-19 outbreak, including a 6-month moratorium on bank loans. Alongside its announcement, the central bank also released a document tackling frequently asked questions about the loan deferment measures.
Here are Bank Negara Malaysia’s frequently asked questions regarding the deferment measures and the corresponding answers provided.
It is a temporary deferment or suspension of loan/financing repayment obligation (principal and interest) for a limited period of time. During this period, borrowers/customers with loan/financing that meet the conditions do not need to make any repayment, and no late payment charges or penalties will be imposed.
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. Loan/financing repayment resumes after the deferment period.
The aim of this package is to provide some relief to individuals and businesses who face temporary financial constraints arising from the COVID-19 pandemic. We hope that this will help individuals and businesses facing financial adversities to cope with challenges during this period. Loan/financing repayment resumes after the deferment period.
For individuals and small and medium enterprises (SMEs), the deferment in conventional loans or Islamic financing repayment obligations (except credit cards) are automatically effected by banks and development financial institutions (DFIs) if the loans/financing meet these criteria:
Meanwhile, corporate borrowers/customers may request for a moratorium on loan/financing repayment from their respective banks.
The deferment is only for 6 months. Please contact the bank if you require a longer deferment period.
No. 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.
Borrowers/customers are advised to contact their banking institutions to discuss on the options available to resume repayments after the deferment period.
No. All individual and SME loans/financing (excluding credit cards) that meet the criteria will automatically qualify for the deferment.
Loans/financing accounts that are already more than 90 days in arrears, will not qualify for the deferment. Borrower/customers are advised to approach their banks to seek assistance.
Loans/financing under R&R program is also eligible for the deferment subject to meeting the criteria.
Banks and development financial institutions (DFIs) have been proactive in responding to the needs of their borrowers/customers with various rescheduling and restructuring packages offered to assist affected borrowers/customers. Such efforts are welcomed and encouraged during these challenging times.
Borrowers/customers that have accepted assistance from banks and DFIs to reschedule and restructure their loans/financing can opt out of such arrangement, if they wish to do so.
All licensed banks, licensed Islamic banks and prescribed development financial institutions (DFIs) regulated by BNM will offer this deferment flexibility. Borrowers/customers that meet the eligibility criteria can avail themselves to this flexibility automatically.
Banking institutions will provide individuals and SME borrowers/customers with adequate information that their loan/financing repayments have been deferred under this scheme.
Such information may be provided through a general advisory issued to borrowers/customers through appropriate channels, and/or published on banking institutions’ websites.
You should contact your bank if you wish to opt-out of the automatic deferment package, or continue to make timely and full repayment of your loan/financing.
Yes, provided that your loan/financing is not in arrears for more
than 90 days as at 1 April 2020.
Yes, provided that your loans/financing are not in arrears for more than 90 days as at 1 April 2020.
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.
For Islamic financing, profit will continue to accrue on the outstanding principal amount. Such profit however will not be compounded in line with Shariah principles.
Banks are however not allowed to impose late penalty charges on the deferred amount.
In other words, the loan/financing repayment is just deferred by 6 months.
Interest/profit will continue to accrue on loan/financing repayments that are deferred. This means accumulated repayment amount during the deferment of repayment period will be added to the outstanding loan/financing amount.
Borrowers/customers are advised to contact their banking institutions to discuss on the suitable workout plans to repay the principal and interest accrued during the deferment period. This may include higher subsequent instalment amount or an extension of the loan/financing tenure.
It applies to all loans/financing outstanding as at 1 April 2020.
No, this is only applicable to loans or financing offered by financial institutions regulated by Bank Negara Malaysia, namely banks and development financial institutions.
Yes. The credit decisions of financial institutions are subject to their respective internal credit policies and assessment.
Unlike individuals and SME borrowers/customers, corporate borrowers/customers should refer to their banks for the deferment and rescheduling and restructuring of their loans/financing.
In addition, these loans/financing must meet this criteria:
Yes. Please inform your company to stop the salary deduction if you wish to have your loan/financing repayments deferred. You should also contact your bank to inform them accordingly.
Please respond to the notification sent by the bank and informed that you wish to opt-out of the automatic deferment package, or continue to make timely and full repayment of your loan/financing.
If you have been unable to meet the minimum monthly repayment on your credit card consecutively for the last 3 months, your card issuer will convert the outstanding balance into a term loan of not more than 3 years at an effective interest of not more than/financing 13% per annum.
Banks will convert the outstanding credit card balances of cardholders who are unable to meet the minimum monthly repayment consecutively for the last 3 months, regardless of the income levels of the cardholders.
Yes, they can. Loan/financing repayment resumes after the deferment period.
Yes, you can continue to use the credit card up to the remaining credit limit after taking into account the balance converted into a term loan/financing. The outstanding balance converted into the term loan/financing is treated as part of the credit card limit. In addition, the monthly term loan/financing instalments will then form part of the minimum monthly repayment amount on the credit card.
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