Banks urged to defer loan repayments
PETALING JAYA: Banks have been urged to offer financial relief not only to those directly affected by Covid-19, but to all Malaysians in the lower and middle income groups.
MTUC secretary-general J. Solomon said the impact of the global virus outbreak has a spillover effect on the whole society.
He said offering to restructure and reschedule financing, as well as deferring loan repayments, was particularly important as this could help stimulate the country’s slowing economy, as it would give the people greater purchasing power.
“We have written to the Association of Banks in Malaysia and requested them to seriously consider deferring loan repayments to all those under the B40 and M40 brackets.
“It’s vital because this outbreak will have a bearing on all levels of the society, and not only those who have lost their jobs or forced to take unpaid leave. But of course the higher income group should still continue repaying.
“And I believe the banks are in the position to do so. They won’t lose out much, because eventually the borrowers will still have to repay their loans,” he told theSun yesterday.
Solomon said the government should also encourage banks to take such measures and to put the rakyat first before anything else.
Solomon was asked to comment on Cuepacs president Adnan Mat’s statement on Sunday that banks should allow loan deferment and restructuring for those who have lost their jobs due to the Covid-19 crisis.
Most banks, however, have already began offering various financial relief to their customers affected by the novel coronavirus.
Economist Prof Dr Barjoyai Bardai, meanwhile, said banks were bound to lose out if they were to provide a blanket financial relief to all Malaysians in the lower and middle income groups.
He said this was because banks were not capable of restructuring loans on its own without government assistance, as any such move would increase their business risk and push investors away from holding stakes in the financial institutions.
“Banks will only do it if they are instructed by the authorities to do likewise. Even then I think the banks will want a guarantee that they won’t lose profit.
Commenting further, Barjoyai said the move would also reduce cash flow among banks as there would be less loan repayments, which he said could ultimately lead to increased bad debts.