Malaysia's new six-month loan 'moratorium': All you need to know before you say 'yes'

Published date14 July 2021
Publication titleMalay Mail Online

Malaysians can finally start applying for the six-month loan relief programme from banks which allows them to start making full payments again only in 2022.

But what do you need to know before deciding whether to take up the option?

If you are struggling with finances right now or expect to have difficulties paying your bank loans over the coming months this year, this six-month loan relief announced last month (June 28) under the Pemulih economic package may provide some temporary and near-instant financial relief.

But is this plan suitable for everyone?

Malay Mail combed through the FAQs and information about Covid-19 payment assistance including the plans provided by three of Malaysia's largest banks (Maybank, CIMB, Public Bank) on their websites as well as general information from Bank Negara Malaysia, and here's a quick summary of the main points you should know:

1. How does the Pemulih loan payment assistance work?

Generally, you are given two options: a) A six-month moratorium on your loan, which means you will not be making any payments for six months but will defer or postpone making payments until after the six-month period ends; or b) A 50 per cent reduction in monthly loan installments for six months.

Note: This applies to bank loans in general, but different banks may offer different payment assistance for different types of financing such as car loans or credit card bills. (Check your own banks' FAQ and terms and conditions.)

2. Who can ask for the six-month moratorium or six-month half payment?

Individuals, small medium enterprises (SMEs), and microenterprises can apply from July 7 to their respective banks to 'opt-in' for the six-month moratorium or halved monthly installments.

This is open to all individuals from all income brackets - B40 low-income category, M40 mid-income category or T20 high-income category.

Your application for the six-month moratorium or the 50 per cent monthly loan instalments under Pemulih will be automatically approved, without you needing to provide any supporting documents. The banks will essentially be relying on borrowers' self-declarations.

(Previously, Malaysia's banks had from April to September 30, 2020 given a six-month blanket automatic moratorium to all eligible borrowers, with the banks then shifting subsequently to a targeted repayment assistance to help borrowers who had reduced income or had lost their jobs.

In comparison, under the loan moratorium option in the Pemulih package that kicked in from July 2021, the prime minister said it does not come with the condition of reduced income and there will also be no need to check whether a borrower has lost his/her job.

It is still best to be honest, as for example, CIMB's terms and conditions on the moratorium or reduced installment options for housing loans and personal loans state that CIMB may change or modify payment terms or cancel a borrower's participation if found that the borrower had given 'false, misleading or incomplete information' in the application for the option. Maybank, in its terms and conditions to borrowers, similarly states that it reserves the right to modify or cancel the repayment assistance if the application for such aid contained 'false, misleading or incomplete representation.')

Depending on your bank and whether you applied through online or other methods, notification of successful approval can be as quick as within 24 hours (for online applications for Public Bank borrowers) or within five days for individuals and within 14 days for companies (for non-online applications for Public Bank borrowers). Maybank said borrowers would be informed within five days of the status of their applications.

Bank Negara Malaysia also states that banks will process the opt-in applications within five calendar days for individual borrowers and within 14 calendar days for microenterprises and SMES, adding that borrowers who have not received any response from their banks within these timeframe can file a complaint to Bank Negara...

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