THE loan moratorium extension on a targeted basis will help prevent legal action against those who are unable to service their debts, Deputy Finance Minister 1 Abdul Rahim Bakri told the Dewan Rakyat today.

“The process we are undertaking is a targeted moratorium. A lot of people will benefit and legal proceedings on borrowers can be avoided.”

Rahim said banks have the capability to carry out the targeted extension as it has the necessary buffers in place.

The moratorium has cost banks an estimated RM66.66 billion as at July 31.

“The decision to extend the moratorium has been scrutinised by Bank Negara Malaysia and the Association of Banks Malaysia.”

Rahim, who is also Kudat MP, said individuals who have trouble servicing their debts can go to the Credit Counselling and Debt Management Agency (AKPK) while small and medium enterprises (SMEs) can refer to the small debt resolution scheme for advice.

He was responding to questions raised by MPs related to the moratorium extension.

Hassan Abdul Karim (Pasir Gudang-Pakatan Harapan) asked whether legal action can be taken in insolvency cases reported when the movement control order started until the Insolvency Act is amended and gazetted.

Mohd Salim Sharif (Jempol-Barisan Nasional) asked a supplementary question if banks have the capability to absorb the moratorium extension, and if this will result in the increase in non-performing loans.

Prime Minister Muhyiddin Yassin announced on July 29 that the government decided to extend the loan moratorium to those who needed further assistance.  

The moratorium extension and targeted aid are expected to benefit more than three million individuals and SMEs.

Borrowers can apply from August 7 onwards. – August 12, 2020