ANY additional interest that some banks may charge on deferred payments cannot be higher than the original hire-purchase contract signed, Bank Negara said.

Bank Negara reiterated that, as a regulator, it has from the very beginning indicated that there will be accrued interest or profit with regard to the six-month moratorium.

“Most important is the additional interest that some banks may charge. We have clearly stated that it cannot be higher than the original hire-purchase contract (signed with the borrower),” the national bank’s Prudential Financial Policy director Cindy Siah Hooi Hoon said today.

“So, they cannot go beyond that,” she said, adding Bank Negara has already informed banking institutions about it.

LINK and Regional Offices director Arlina Ariff said the announcement yesterday was to streamline the process and ensure everyone has a clear picture of the deferment rules according to the Hire-Purchase Act 1967 (HP Act) and shariah rules.

“As a regulator, Bank Negara must make the announcement first followed by banks, which will then ensure the procedures are followed as per requirements outlined in the HP Act, as well as shariah requirements,” she said.

On whether those who have skipped their April and May payments need to pay additional interest, Arlina said: “It depends on what the borrowers want to do. If they want to continue with the deferment, they can continue to do (so). 

“There shouldn’t be any penalty,” she said.

Meanwhile, deputy governor Jessica Chew said Bank Negara’s objective is to ensure people are well informed of the moratorium details and the changes that come with the deferment.

“It was an effort to ensure that banks are more systematic about the process,” she said.

Acknowledging the communications could have been much clearer, she said under the HP Act, any deferment would require all the steps being spelled out now.  

“Ultimately, when you add all the interest in, (it) comes to the same thing. It is more punitive if you pay early under the HP Act. So, that is the only difference.

“Under the HP Act, just the act of deferring the repayment schedule, even in a scenario when nothing changes, would require all the additional steps that we are talking about now,” she said. – Bernama, May 1, 2020.