In what seems to be an immediate response to the announcement of the RM15 billion economic stimulus package by Prime Minister Tan Sri Muhyiddin Yassin, Bank Negara Malaysia (BNM) said that people who have taken loans may request a repayment moratorium and that their records on the CCRIS
(Central Credit Reference Information System) will not be affected during this time when Malaysia is contending with the economic impact of the Covid-19 pandemic.
In his announcement, Prime Minister Muhyiddin said that the RM15 billion Perlindungan Ekonomi dan Rakyat Malaysia (PERMAI) assistance package aims to combat Covid-19, maintain the welfare of the people and encourage continuity of economic activities in the nation.
Perlindungan Ekonomi dan Rakyat Malaysia (PERMAI)
contains 22 measures, including one that suggests the continuation of the loan-repayment moratorium of borrowers and elimination of their loan-repayment instalments, according to the Prime Minister.
The deferment package enables small and medium-sized enterprises (SMEs) and individuals that own a residential property or commercial property to delay the repayment of their loans.
The moratorium covers traditional loans and repayment obligations for Islamic lending (including mortgage loans and lease purchase loans), except credit card balances.
However, many may be wondering if you should take or continue the moratorium for their loan. Keep reading to learn if you should take or continue with a moratorium for your loan.
Because of the current Movement Control Order (MCO) that has affected businesses and jobs in certain states across Malaysia, the moratorium on loan repayments seems like a welcome move to ease the economic tension.
This can also ease the tension in the property industry as a whole, including for property developers and the launch of new housing development.
As many salary earners have been affected by the virus outbreak and the MCO, particularly those in the tourism, hospitality, and retail sectors, the deferment offer came just in time to help alleviate property buyers' repayment burden.
For one, given the existing and potential risks that the pandemic presents, the money saved from the moratorium could be useful for potentially rainy days ahead.
Extension of Moratorium
The Malaysian Institute of Estate Agents
(MIEA) had earlier urged the government to extend the moratorium on loan repayment to individuals who, like those whose earnings are commission-based, face financial difficulties during the partial shutdown of the country.
The moratorium on monthly loan repayment
would also help those who receive regular salaries or earn commission-based income to get through these difficult times. They will have more cash to pay for more urgent daily expenses.
The CEO of a consulting firm YYC Holdings Sdn Bhd
, Datin Yap Shin Siang, states that SMEs would be the biggest beneficiaries since they are among the most impacted by the Movement Control Order.
Many banks had already agreed to offer loan deferment packages before BNM declared the moratorium extension. However, the banks required SMEs to present at least six months of income statements to show their repayment potential.
At the same time, the application process was time-consuming, and the approval was on a case-by-case basis.
During the MCO period, when most businesses are forced to stop their operations, a moratorium extension would give them a breather to strategize and wait for the economy to recover.
Individuals, including home loan borrowers, are encouraged to consider taking the moratorium for their residential property
. If the MCO is further extended for a longer period, this could help them build up contingency funds.
One of the positive things about the deferment of loans is that people have the choice of taking it or not. If they choose to do so
, they must realize that there will be a cost, especially if interest is compounded.
Therefore, individuals and businesses will have to determine their financial situation, calculate the moratorium's cost, and decide what's best for them.