Bank Negara urged to reconsider decision to charge additional interest
TAWAU: The Federal Government is urged to intervene on the Bank Negara Malaysia's (BNM) latest announcement that the hire purchase loans and fixed-rate Islamic financing would face additional interest charges after the six-month moratorium, which runs from April 1 to September 30, 2020.
Lawyer Jhasarry Kang urged the Federal Government to immediately order BNM and the Association of Banks Malaysia (ABM) to reconsider its decision and not to impose any form of interest while the moratorium is still in effect.
He said that following the official report, BNM and the banks informed the borrowers that they could either choose to settle the collective six-month loans without any additional interest charged at the end of the moratorium period, or to pay slightly more after the moratorium expires in September 2020.
"It was previously assumed that those who chose to take up the moratorium would not be charged additional interest on their deferred payments, seeing how hire purchase loans and Islamic financing plans to follow on a fixed-rate basis, where interest charges are calculated upfront.
"Furthermore, the government had announced earlier in March 2020 that the deferment payment for six months was to assist or ease the burden faced by the people particularly the small-medium enterprise (SMEs) and individuals as well as the corporate sector during the difficult time during the Covid19 pandemic period," he said in a statement yesterday.
Jhassary viewed that the announcement made did not augur well for the public like B40 and M40 groups who may have commitment in hire purchase loans with the banks, in which there would be an adverse effect on them.
The BNM's move was said to be inhuman on borrowers whose finances were already stretched thin during this period, he said.
“The government, especially the Finance Ministry must intervene and revoke this decision made by BNM or else it will greatly damage the public confidence in the government's assurances that it would safeguard their welfare at all times,” he added.
Jhasarry said the Covid-19 pandemic and the Movement Control Order (MCO) are unprecedented and rare situation.
"Such crisis has impacted most of all sectors of businesses and industries, as a result it brings into partial or major collapse of the economy though some sectors like essential services providers are still operational."
He believes that due to the outbreak of the virus, more and more businesses and industries will suffer closing down or downsizing operations, and if so happened, there will be many more employees or workers undergoing retrenchment or salary cut.
“The government must help the people and at the same time the companies that employ them. If the companies collapse, the people will be out of work. Thus, the government shall be wise in making any decision in order to get the economy back in track. It will eventually recover, but it takes time,” he said.