The Association of Banks in Malaysia (ABM) and Association of Islamic Banking and Financial Institutions Malaysia (AIBIM) understand that this would be a particularly anxious time for many businesses and families as they begin to find their feet financially as economic activity gradually resumes in Malaysia.
In line with YAB Prime Minister’s announcement on 29 July 2020, ABM and AIBIM would like to assure borrowers/customers of the continued commitment of its member banks to provide additional assistance for those affected by the COVID-19 pandemic. Repayment assistance will be available for borrowers/customers adversely affected by the COVID-19 pandemic upon the expiry of the blanket moratorium on 30 September 2020.
Under the targeted repayment assistance measures1, conventional and Islamic banks will provide additional assistance post 30 September, specifically for individual borrowers/customers who have lost their jobs in 2020 and to those individual borrowers/customers who are suffering from a drop in income due to the COVID-19 pandemic (collectively known as “Severely Affected Categories”). The additional specific assistance to be provided are as follows:-
i. Individual borrowers/customers who have lost their jobs in 2020 and have yet to find a job must apply to their banks for an extension of the loan moratorium for a further 3 months; and
ii. Individual borrowers/customers who are still in employment but whose income have been affected due to the COVID-19 pandemic (e.g. as a result of reduced working hours, pay cuts, etc.) must contact their banks to change the terms of their financing facility so that the monthly instalment will be commensurately reduced for at least six months from 1 October 2020, depending on the type of loan/financing.
Banks will evaluate the borrowers’/customers’ financial position at the end of the relief period to consider whether further repayment assistance is needed. For hire purchase loans/financing, affected borrowers/customers will be offered revised instalment schedules that are consistent with the Hire Purchase Act 1967 or equivalent Islamic banking policies.
In all cases, borrowers/customers will have to contact their banks to discuss options that are available to them and apply for these reliefs. Member banks have made efforts to simplify the application and documentation process. Upon receiving relevant documentary evidence of eligibility, banks will provide the specific repayment assistance as set out above to the Severely Affected Categories.
Assistance is also available for affected borrowers/customers who do not fall within the Severely Affected Categories stated above. Banks will assist affected borrowers/customers in a more targeted, case-by-case approach to enable banks to focus on supporting those in real need of assistance whilst also supporting the country’s economic recovery. The affected borrowers/customers may include, but are not limited to SMEs, corporates and other individuals, who are still facing difficulties with their loan/financing repayments and cash flow problems arising from the COVID-19 pandemic.
Examples of such repayment assistance include payment of interest/profit only for selected products for a specified period, possible extension of the loan/financing tenure to enable lower monthly instalments and amending other terms and conditions of the loan/financing where appropriate.
All borrowers/customers who are taking up any repayment assistance during this period can be assured that the provision of such repayment assistance will not appear in their Central Credit Reference Information System (“CCRIS”) reports so long as the customer/borrower continues to make the loan/financing repayments promptly based on the agreed revised repayment schedule.
The banking industry urges borrowers/customers facing financial difficulties in servicing their commitments, including the Severely Affected Categories, to reach out to their respective banks to discuss repayment assistance options as soon as possible between 7 August and 7 September 2020. Borrowers/customers are advised to apply early to allow sufficient time to discuss and confirm options, and to have repayment assistance effected in time for October 2020 instalments.
Borrowers/customers are encouraged to get further information from the respective member banks’ available channels such as banks’ websites and/or their official social media platforms. The individual banks will be reaching out to borrowers/customers but as a matter of caution, we would like to remind borrowers/customers to be wary of scammers and only respond through official bank channels. Borrowers/customers are also advised not to deal with any third parties claiming to be agents/representatives of the banks on matters relating to repayment assistance.
For those whose livelihoods have not been affected, member banks strongly urge them to resume repayment of their loans/financing in October 2020 as this will reduce their overall debt and borrowing/financing cost.
The banking industry welcomes the announcement from the Government to end the blanket moratorium and move towards a targeted assistance approach. The banking industry has been working closely with Bank Negara Malaysia to ensure that assistance continues to be provided to affected borrowers. The banks have supported borrowers/customers through the challenging economic environment since the start of the COVID-19 pandemic and remain determined to support borrowers/customers, as well as the economy in general, navigate out of the pandemic.
About The Association of Banks in Malaysia
The Association of Banks in Malaysia (ABM) has 26 members comprising the commercial banks that currently operate in Malaysia. The main objective of ABM is to promote the establishment of a sound banking system in Malaysia in cooperation and consultation with the regulators. Guided by ABM's mission statement, "Forging public understanding for a responsible and responsive banking industry", ABM takes on the role of an important intermediary between banking customers and its member banks. ABM aims to facilitate and create a conducive yet competitive banking environment while promoting orderliness and ethical banking practices.
About Association of Islamic Banking and Financial Institutions Malaysia
The Association of Islamic Banking and Financial Institutions Malaysia (AIBIM) was established in 1996 as the Association of Interest-Free Banking Institutions Malaysia. Currently, AIBIM has 26 member banks. AIBIM promotes sound Islamic banking system and practice in Malaysia; represents interest of members locally and abroad; provides advice and assistance to members pertinent in the development on Islamic banking and finance at local, regional and global level; coordinates human capital development initiatives, and promotes public awareness.
