UNIONS and consumer groups welcomed the extension in the moratorium extension for low- and middle-income folk, but cautioned that banks could hamper its implementation.

They said compared with the earlier moratorium from March to September, the extension requires borrowers to apply directly to their banks starting on August 7.

The stringent rules on documentation in the application process will likely turn away many deserving families, said the Malaysian Trades Union Congress (MTUC).

MTUC, the nation’s largest private union, urged the government to make the extension of the moratorium automatic for households already receiving government aid, such as the Bantuan Sara Hidup (BSH) and Prihatin.

The union group’s concerns were echoed by the Federation of Consumer Associations (Fomca), which said banks are typically legalistic in their attitude towards borrowers.

This could result in deserving workers being denied a deferment on their bank loans just because they do not fit certain technical criteria, said Fomca secretary-general Paul Selvaraj.

“Each family is unique. Some have just one breadwinner and if he or she suffers a pay cut, it affects the expenses of the entire family,” said Selvaraj.

If the bank chooses just to reduce the loan installment based on the proportion of the pay that was cut, the breadwinner may still find it hard to provide for the family because other living expenses may go up, he added.

“So, the central bank has to play a more critical and active role in implementing this so that if workers are unable to secure a moratorium, they can appeal to Bank Negara.

“Banks cannot give out the moratorium from just a legal perspective. This is something that depends on compassion and regulation so that consumer welfare is protected.”

Putrajaya earlier today announced that the moratorium will be extended from September onwards after workers’ groups and businesses complained that there will be more job losses in October.

This time, however, the moratorium will be targeted and given only to those who apply for it from their respective banks.

The moratorium will be extended by another three months for those who have lost their jobs this year and have yet to find new employment.

Prime Minister Muhyiddin Yassin had said those who are still employed but had their pay cut will get their monthly payments reduced proportionate to their income.

For example, monthly instalments for loans will be reduced to a rate that is in line with the reduction of income, Muhyiddin said.

The aid will be in effect for at least six months, and extensions will be granted depending on the current income of the individual.

MTUC secretary-general J. Solomon said Putrajaya should automatically extend the moratorium by at least six months for all B40 and M40 families, irrespective of their employment status.

“Those who are working but forced to take pay cuts are in need of the moratorium to be extended, just as much as those who are jobless.”

Banks should be allowed to use Putrajaya’s database on welfare aid recipients to automatically approve the moratorium to these vulnerable households, he added. – July 29, 2020.