THE banking sector will rack up RM6.4 billion losses as a result of the six-month moratorium on loans, which ends in September, said Finance Minister Tengku Zafrul Tengku Abdul Aziz.

The figure is based on accounting standards in the Malaysian financial reporting standards, which derived RM1.06 billion for each month of the moratorium.

“For the period of six months the moratorium is in force, the loses are expected to amount to RM6.4 billion,” Zafrul told the Dewan Rakyat today.

The capacity of banks to disburse new loans has also been reduced by RM79 billion, he added.

Zafrul was responding to a supplementary question by his predecessor, Lim Guan Eng (Bagan-PH), on the losses suffered by banking institutions as a result of the moratorium on borrowings. 

In his first question, Lim had also asked the Finance Ministry to state whether the moratorium would be extended by a mother six month and if not, what assistance would be made available to businesses and individuals facing cash-flow problems.

Malaysia is the only country to impose an automatic moratorium for six months to aid the people and businesses, said Tengku Zafrul.

“As of now, more than 7.7 million people or 93% individual borrowers, as well as 243,000 businesses or 95% of small-medium enterprises have benefited from the moratorium on borrowings.” 

Although the moratorium did not apply to credit cards, banks have taken the initiative to convert the debt to term loans for up to three years at a lower interest. 

However, the senator said although the moratorium won’t be extended after September, banks will be offering targeted assistance to those in need. 

Among the initiatives undertaken by banking institutions include extending the payback period to reduce interest, revising terms and conditions at lower interest, such as converting overdrafts to term loans or by providing exemptions that will help the borrower achieve financial stability. 

He added that banks have contacted up to 394,000 borrowers. – July 27, 2020.