NAJIB Razak has called on banks to extend their hire-purchase loan moratorium beyond September to help those in dire financial straits due to the Covid-19 pandemic.

Many companies and borrowers could end up bankrupt if the moratorium, which took effect in April, is not continued, said the former prime minister during his speech on the royal address in Parliament today.

“We must realise that the main reason banks want the instalment payments to continue is to provide fresh loans to new customers.

“If demand for new loans has dipped, then there’s no need for banks to force their customers to repay the principal payment.”

Putrajaya announced the moratorium as part of its strategies to address the economic fallout from the virus crisis.

In the event that banks are unable to extend the moratorium for interest and principal payments, said Najib, they should consider allowing borrowers to repay only the interest rate.

“On this matter, the government must be more stern. It must not bow down to banks’ demands,” he said, adding that financial institutions have made large profits in the past.

“For example, if a bank earned RM5 billion in the past, and is making only RM1 billion to RM2 billion now, it won’t cause the country’s financial system to collapse.

“That’s why this is the time for banks to sacrifice, so that their customers are not affected (now) and are able to return billions in profits to banks in the future, when the Covid-19 crisis ends.”

Earlier today, the Malaysian Trades Union Congress (MTUC) urged Putrajaya to clearly state whether it will tell banks to extend the moratorium, which is due to end in two months.

MTUC secretary-general J. Solomon asked that either Prime Minister Muhyiddin Yassin or Finance Minister Tengku Zafrul Tengku Abdul Aziz speak up to end the ambiguity over the matter.

On June 28, Tengku Zafrul said the government is discussing with banks on extending the moratorium.

However, on July 3, Bank Negara Malaysia assistant governor Adnan Zaylani Mohamad Zahid said the central bank is not considering doing so. – July 16, 2020.