BANKS have joined forces with regulators to organise a repayment assistance campaign (RAC) for borrowers facing financial difficulties, as the deadline for the loan moratorium expiry looms at the end of this month.

Association of Banks in Malaysia (ABM) executive director Kalpana Sambasivamurthy said campaign events will take place in major cities both in the peninsula and Sabah and Sarawak.

“Through these channels, borrowers are able to consult on a face-to-face basis with their banks to address their current financial circumstances regarding loans and repayment assistance.  

“These campaigns will cover cities such as Johor, Penang, Kuantan and Sarikei,” she told The Malaysian Insight. 

The Kuala Lumpur campaign was held last weekend. 

The RAC was also held at the Persada Johor International Convention Centre and Hotel Raja Bayan Lepas in Penang yesterday and will continue today.

The campaign will subsequently take place at Dewan Utama Majlis Perbandaran Kuantan in Pahang today and tomorrow, and at Dewan Kg Jerijeh Belawai in Sibu, Sarawak, on Tuesday.

Bank Negara and the Credit Counselling and Debt Management Agency (AKPK), as well as other financial institutions, are jointly organising the RAC.

Kalpana encouraged borrowers who need assistance servicing their loans to reach out to their respective financial institutions as quickly as possible. 

“Our member banks are sympathetic towards the plight of their customers who have been negatively affected by the Covid-19 pandemic and have been working closely with the regulator to ensure that assistance continues to be provided to affected borrowers.” 

Such assistance may include payment of interest only for selected products for a specified period, possible extension of the loan tenure to enable lower monthly instalments, and amending other terms and conditions of the loan, where appropriate.

Contact your bank

This form of targeted assistance was announced by Prime Minister Muhyiddin Yassin on July 29. The automatic loan moratorium, which ends on September 30, began in April as part of efforts to ease the financial burden on individuals and small and medium enterprises (SMEs) because of the Covid-19 pandemic.

The targeted assistance applies to individuals who lost their jobs and have yet to find another one. They can seek to extend the moratorium by three months. 

Individuals who are employed but have had their incomes affected by the pandemic can apply for a reduction in their monthly repayment for at least six months, depending on the type of loan or financing.

Individual borrowers who fall within the above two categories and who want further help must contact their banks.

However, Kalpana also urged borrowers who do not fall under the two categories but require further assistance to contact their banks to work out a suitable repayment option. 

“Such assistance may include payment of interest only for selected products for a specified period, possible extension of the loan tenure to enable lower monthly instalments and amending other terms and conditions of the loan where appropriate,” she said. 

Deputy Finance Minister II Mohd Shahar Abdullah told the Dewan Negara recently that banks have reached out to almost two million people to offer targeted assistance in relation to the repayment of their loans. 

As of August 28, 1.1 million out of two million responded to a feedback survey with almost 300,000 confirming that they need help servicing their debt up to August 28, he said. The rest is still weighing options.

Debt management

AKPK statistics made available to The Malaysian Insight show that 324,815 people have signed up for the agency’s debt-management programme, while 1.09 million sought counselling as of the end of July. 

Poor financial planning was cited by 36.7% as the main reason for signing up, followed by high cost of living at 34.7%. 

About 12.3% cited failure or slowdown in business, followed by job losses, retrenchment or loss of breadwinner at 8.8%.

Some 6% attributed high medical expenses as the reason, while 1.5% cited other reasons. 

Of those who signed up for the programme, those with an annual income of RM24,000 made up the bulk of the enrolments at 33.5%, or 103,595 individuals. 

This was followed by those with an annual income of between RM24,000 and RM36,000, who formed 20.8% of applicants, or 64,512 individuals.

The third largest group was those with the annual income bracket of RM36,000 to RM48,000 at 16.1%, or 50,053 people.

There were also 8,730 individuals with an annual income of above RM120,000, forming 2.8% of the participants.

The smallest group was those with an annual income of between RM72,000 and RM96,000, at 1.9% or 5,798 people. – September 13, 2020.