THE Malaysian Trades Union Congress (MTUC) today demanded that the government intervened to stop banks from charging customers additional interest on their hire purchase loans should they take up the offer of a six-month moratorium on repayment.

MTUC secretary-general J.Solomon is up in arms over the Association of Banks in Malaysia (ABM) statement yesterday which stated that customers would not be charged additional interest if they paid the accumulated six months’ deferred payments together with their October instalment.

Branding the decision as a “totally unconscionable act” and inhumane as it would “further squeeze consumers in every way possible, without any regard for the welfare of the people”, Solomon appealed to Prime Minister Muhyiddin Yassin to demand that the central bank governor be compelled to justify “this grossly inappropriate approval for banks to commit nothing short of another daylight robbery on borrowers already at their wits end”.

He said the central bank’s approval “clearly goes against the government’s proclamations that it would do everything possible to lighten the financial burden of workers and the public in general who are suffering from the economic fallout of the Covid-19 pandemic”.

“If the banks are allowed to charge interest on the deferred loan payments, borrowers could end up paying thousands of ringgit in annual percentage interest as stipulated in their HP (hire purchase) agreements.

“This is money they can ill afford to give away, give their dire situation,” Solomon said in a statement today.

At the same time, he urged the central bank to rescind the approval given to banks to levy interest.

“Bank Negara and the banks add insult to injury by stating that borrowers would not pay any interest if the deferred loan payments are settled in October, at the end of the moratorium period.

“How many people in present day would have the means to do so, given the economic fallout, job retrenchments along with pay cuts that are taking place across the country?”

He reminded Bank Negara of its March statement that said the country’s banking system was in a strong position as it had sufficient liquidity to ease financial strains and support intermediation activities to contain the economic impact of the Covid-19 pandemic, 

If that were the case, why was the central bank a “willing partner” in this “cruel measure”, he said.

“By far, this is the unkindest cut by the banks and BNM on the public, many of them who are workers suffering from the impact of the prolonged movement control order and the economic fallout of Covid-19.

“The government, especially the Finance Ministry must intervene and revoke this approval given by Bank Negara.”

Failure to do so, Solomon said, would greatly damage public confidence in the government’s assurances that it would safeguard the welfare of the rakyat at all times.

“BNM’s conduct in this episode is bereft of any integrity and clearly goes against the central bank’s core pledge – to achieve sustainable economic growth for the benefit of the nation – and tantamount to sabotaging the government and the rakyat.”

Solomon said in these trying times, the government must not hesitate to take stern action against any entity, be it public or private, which has caused the rakyat to suffer. – May 1, 2020.