Loan moratorium: MP asks if govt passing off delayed payments as bank losses
- UPDATED 2.26PM | Added Lim Guan Eng's comments.
Johor Bahru MP Akmal Nasir has questioned the Finance Ministry's claim that banks are suffering multi-billion ringgit losses due to a moratorium on loan repayments.
Akmal (above) pointed out that the banks are not writing off the loans but are only delaying payments....
- UPDATED 2.26PM | Added Lim Guan Eng's comments.
Johor Bahru MP Akmal Nasir has questioned the Finance Ministry's claim that banks are suffering multi-billion ringgit losses due to a moratorium on loan repayments.
Akmal (above) pointed out that the banks are not writing off the loans but are only delaying payments.
"What is meant by the banking sector losing RM1.06 billion a month for six months?
"The people's understanding is that the moratorium is a delay for instalment payments, not debt being forgiven.
"Are the losses merely delayed profits? Furthermore, some small business borrowers still accrue interest during the moratorium period," the PKR lawmaker said in a statement.
He said this in reference to Finance Minister Tengku Zafrul Abdul Aziz who yesterday said banks were incurring losses of RM1.06 billion a month or RM6.4 billion during the six-month moratorium period on bank loans from April to September.
Tengku Zafrul told the Dewan Rakyat that moreover, the six-month moratorium meant that the banks' capacity to disburse new loans was reduced and this amounted to RM79 billion.
He had said this in reference to former finance minister Lim Guan Eng's question on whether the loan moratorium would be extended to help Malaysians cope with the economic downturn brought about by the Covid-19 pandemic.
Akmal, in his statement today, said the government's reasoning appeared geared at justifying the non-extension of the loan moratorium.
He said the banks will eventually get their profits on top of special tax benefits the government is granting them for the loan moratorium period.
He pointed out that the government, in exchange for the loan moratorium, was exempting tax on the interest gained on instalments that were delayed during the moratorium.
Furthermore, he said the Malaysia Deposit Insurance Corporation Act (PIDM) also protected bank depositors for up to RM250,000.
"The banks will only suffer losses when their loans become non-performing loans (NPL).
"NPLs occur when a loan is defaulted upon for three consecutive months," Akmal said.
He added that a moratorium extension will help individual borrowers and small businesses recover their income.
"If the moratorium is ended before the economy recovers, the NPL rate will increase causing actual losses for the banks."
As such, Akmal urged the government to consider extending the loan moratorium for another six months.
'Small cost for bank raking in billions'
Meanwhile, DAP's Bagan MP Lim (below) said the RM6.4 billion cost is a small price to pay to help 7.7 million borrowers and more than 245,000 small and medium enterprises (SME).
The former finance minister added that the banking industry had earned RM32 billion in after-tax profits in 2019.
"RM32 billion in after-tax profits for 2019 should provide sufficient cover for banks to bear the RM6.4 billion cost of delivering on their corporate social responsibility of extending moratorium of bank loans by another six months to aid their customers during the Covid-19 economic crisis.
"Even if the banks are unwilling to cough up the RM6.4 billion, the federal government can bear the cost of RM6.4 billion to aid the 7.7 million individual borrowers and 245,000 SMEs," he said in a separate statement.
Not doing so, Lim said, would only render the government's economic stimulus package "heard but not felt".
"DAP urges Prime Minister Muhyiddin Yassin to immediately announce the extension of the moratorium to assure ordinary Malaysians, and reassure SMEs and businesses that they are not forgotten or alone in facing the economic crisis," he added.
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