Sunday, September 20

Govt urged to extend moratorium

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KUALA LUMPUR: The Malaysian Trades Union Congress (MTUC) has urged the Finance Ministry and Bank Negara Malaysia (BNM) to pull its weight in ensuring banks extend the moratorium by at least another six months, especially for the targeted group of workers who are still unable to service the loans.

In a statement, MTUC secretary-general J Solomon said this would include many of the 800,000 workers who had lost their jobs until April this year, and thousands more who had been forced to take deep paycuts or go on unpaid leave by their employers.

He said for banks to adopt a ‘business-as-usual’ attitude and expect workers, who were still mired in job losses and with little or no income to resume paying their loans, was ‘a downright cruel and inhumane act against the borrowers’.

“The official statistics clearly show that many workers have been rendered unemployed due to the economic downturn caused by the Covid-19 pandemic and the opening of the economy is an ongoing, albeit, slow process; it will take time for workers to get back on their feet and service their loans.

“There should not be any doubt on the part of the government, especially the Finance Ministry and BNM, that a large slice of the workforce are far from ready to resume servicing their car and housing loans.

“If the banks persist in ‘collecting’, then we can expect to see record forfeitures of vehicles and homes of the working class which will inflict untold misery on them and their families,” he said.

Solomon said the ministry and BNM must not abdicate their responsibility to ensure that the moratorium would be extended for another six months to all Bottom-40 (B40) and Middle-40 (M40) groups, as well as all workers who had lost their jobs irrespective of salary scale.

The same extension should also be given to companies with loan facilities, which were struggling to keep afloat during this pandemic, he added.

He said there was no question of banks incurring losses because of the moratorium; however, the loans would not be written off – the instalment payments would merely be deferred until the economy normalised.

“If at all, only a reduction in profits is possible due to loss of reinvestment interest and liquidity cost.

“Loss of reinvestment interest, in any event, is inevitable given the draw back due to the pandemic.

“In that sense, the question of losing reinvestment interest is no justifiable cause.

“What cannot be comprehended is how BNM arrived at the RM47.5 billion loss arising only due to liquidity cost,” he said, citing BNM assistant governor Adnan Zaylani Mohamad Zahid’s claim that the six-month moratorium granted in April had cost financial institutions some RM47.5 billion.

In 2019, all the banks in Malaysia recorded multi-billion ringgit in profits, as had been the case for so many years.

In facing Covid-19, both the Finance Minister and BNM had repeatedly said the banking sector remained strong with more than adequate financial liquidity.

Solomon said BNM figures showed that the banking system’s excess capital and liquidity stands at RM159 billion and RM199.6 billion, respectively, above the regulatory minimum levels.

According to BNM, this had enabled banks in Malaysia to play a leading role in assisting households and businesses to recover from the Covid-19 pandemic shocks.

“These point to a strong and vibrant banking sector that is easily able to grant a further six-month extension to needy Malaysians,” he said.

Yesterday, BNM said it was unlikely that financial institutions would extend the six-month moratorium on payment of monthly instalments for vehicles and housing loans, which would end this Sept 30. — Bernama