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KUALA LUMPUR: Targeted assistance will allow banks to assess the unprecedented situation brought on by the Covid-19 pandemic and channel funds to much-needed sectors and aid economic recovery.
Various measures have been implemented, including the RM10 billion Special Assistance Facility (SRF) to provide temporary relief to businesses, said Bank Negara Malaysia Deputy Governor Jessica Chew.
In addition to SRF, which has been fully used, other funds such as Penjana SME Financing (PSF), SME Digitalisation Matching Grant and Smart Automation Grant (SAG) are still available to support companies in their restart and recovery.
The RM 1 billion Penjana Tourism Finance (PTF) is still available to businesses in the tourism sector. This fund will allow the sector to adapt to the new norm, allowing companies to revive and recover more quickly.
However, for companies to maintain their recovery and households to have continued access to financing, the banking sector must be strong.
The resilience of the banking sector is important and targeted assistance is the right way to go, Chew told Bernama in an interview.
“Targeted assistance helps people get back on track and reduces their overall debt. The information available on a borrower’s payment history also encourages banks to make loans.
“On the contrary, the absence of payment data as a result of a general moratorium will affect the ability of the financial system to mobilize new loans that are critical to economic recovery,” he said.
Malaysia’s household debt accounts for a high 87% of the country’s gross domestic product (GDP), so maintaining a healthy credit culture is important to ensure continued trading activity. Borrowers who can afford to resume loan repayments are encouraged to do so.
For borrowers who have the financial capacity, resuming payment is the preferred option, as they do not want to unnecessarily refinance their loans and incur higher borrowing costs.
By August 2020, the total value of loan repayments had reached 70% of pre-moratorium levels.
“People would come close, especially during RMCO (recovery motion control order) when people felt they were in a better position. They started repaying their loans even before the moratorium ended, ”Chew said.
Banks continue to assist borrowers through payment assistance arrangements that are designed to mitigate the difficult financial situation of the latter.
When asked about the different payment tenures, Chew said that if borrowers could maintain their original monthly payment with some adjustments due to accrued interest, their tenure would not change much.
However, if your monthly payment is substantially reduced and you restructure due to your current financial circumstances, the tenure may need to be extended further, he explained.
In addition, it is also vital to preserving the resilience of the banking and financial sector in the country, Chew said when asked if a blanket moratorium is not possible, as the banking sector appears to have a solid foundation.
“The banking system is on a solid footing after years of observing strong lending standards and building capital buffers.
“(However), there remains considerable uncertainty until a vaccine is widely available,” he said, adding that buffers from the banking and financial sector will be important for banks to support the economy during the current period of uncertainty and ensure that resources are directed to those who need help.
The BNM deputy governor assured borrowers that every effort had been made to simplify the application process for payment assistance.
Multiple channels of support are provided for distressed borrowers, such as BNMTELELINK and the Agency for Credit Counseling and Debt Management (AKPK). The central bank also maintains regular contacts with SMEs to address the problems they face.
Borrowers can contact BNMTELELINK at 1-300-88-5465 or AKPK at 03 2616 7766.
