BNM allows loan deferment up to 6 months for individuals and SMEs

By ASILA JALIL / pic by TMR FILE PIX

Bank Negara Malaysia (BNM) has granted a deferment of loan and financing repayment for up to six months to individuals and small and medium enterprises (SMEs) effective April 1, to assist borrowers while the country battles the coronavirus pandemic.

The central bank said the deferment is applicable to performing loans that have not been in arrears for more than 90 days as at April 1, and denominated in ringgit. 

Banking institutions will provide conversion of credit card outstanding balances into a three-year term loan with reduced interest rates to assist borrowers.

“It is important to note that the interest/profit will continue to accrue on loan or financing repayments that are deferred and borrowers will need to honour the deferred repayments in the future. 

“Borrowers should therefore ensure that they understand and discuss with their banking institutions on the options available to resume their scheduled repayments after the deferment period,” BNM said in a statement.

Corporations are also allowed to discuss with their lenders to defer or restructure their loans. The move, the central bank said would enable corporations to preserve jobs and resume economic activities when the conditions improve. 

BNM stressed that the banking system remains resilient and has enough liquidity to sustain the country’s financial need despite the reduction of the Statutory Reserve Requirement (SRR) by 100 basis points (bps). 

It said the recent SRR reduction has released approximately RM30 billion worth of liquidity into the banking system on top of the excess liquidity estimated at RM160 billion. 

“Of this, approximately RM100 billion placements with the Bank under open market operations can also be used to meet the liquidity needs of the banking system.

“BNM will also continue to supply daily ringgit liquidity to banks via various tools under our open market operations, including the outright purchase of government securities, foreign exchange swaps, reverse repos and the standing facility,” it said. 

BNM added it has reviewed its planned regulatory and supervisory activities in 2020 to ease compliance and operational burdens on banking institutions in a bid to enable banking institutions to support their customers as well as manage risks from current developments.