In March, Bank Negara Malaysia (BNM) issued a directive for a six-month moratorium on all loan repayments due to the escalating Covid-19 pandemic in the country. Also known as the Deferment Package, the initiative aims to ease the financial burdens faced by individuals and businesses caused by the pandemic.
The moratorium, which is an automatic extension of credit facilities (except credit cards), took effect from April 1. During this period, borrowers with loan/financing that meet the conditions do not need to make any payment, and no late payment charges will be imposed.
According to Prime Minister Tan Sri Muhyiddin Yassin in a statement, all measures to postpone loan repayments, restructure credit card debt and business loans involve a sum of around RM100 billion.
Besides the six-month loan postponement, the measures announced also included the option to convert existing credit card balances into a three-year term loan/financing (known as the Conversion Package).
For individual borrowers, you may already know that in order to qualify for the automatic deferment, the loan or financing should not be in arrears exceeding 90 days as at 1 April 2020; and that it should be denominated in Malaysian Ringgit.
However, Bank Negara Malaysia latest announcement stated that borrowers of hire purchase loans or fixed-rate Islamic financing would be required to perform additional steps to complete the process of deferring their loan payments under the recently announced moratorium. Many are still unclear about this and expect further clarification for this particular matter from BNM.
Meanwhile, these are the answers to some of the major concerns raised by many borrowers, extracted from the comprehensive FAQ:
1.If I opt for the deferment, will my CCRIS records be adversely affected?
No. Your CCRIS will not be affected during the deferment period. It will remain similar as per the status as at 31 March 2020 throughout deferment period.
2. Would my loans or financing with other non-bank credit providers such as credit cooperatives, authorised money lenders or my employer qualify for this deferment package?
No. Other non-bank lenders or credit providers that are not regulated by BNM are not participating institutions in this package.
3. Will I be charged additional interest/profit on the instalment amount that is deferred by six months during the period?
For conventional loans, interest will continue to be charged on the outstanding balance comprising of both principal and interest portion (i.e. compounded) during the deferment period. However, some financial institutions (FIs) may decide not to compound interest during the deferment period. Please check your FI’s website for further information.
For Islamic financing, profit will continue to accrue on the outstanding principal amount. Such profit however will not be compounded in line with Shariah principles. FIs are not allowed to impose late penalty charges on the deferred amount. In other words, the loan/financing payment is just deferred by six months.
4. Will I qualify for the automatic conversion package by FI, despite earning RM5,500 and above?
All cardholders are eligible to participate in the conversion package regardless of their level of income. For cardholders that have missed three consecutive months of their minimum monthly payments, FIs will automatically convert the outstanding credit card balances of cardholders into a term loan of up to three years in tenure.
FIs will also provide other cardholders with the option to opt in at any point from 1 April to 31 December 2020 to convert their credit card balances into term loans at the same tenure and rate.
5. If my credit card outstanding balances is converted to a term loan/financing, will my CCRIS records be adversely affected?
Your CCRIS record will not be adversely affected, if your credit card account is performing (in arrears for 90 days or less) at the point of conversion. However if your credit card account is already non-performing (in arrears for more than 90 days), this will continue to be reflected in your CCRIS record. The account will be tagged as R&R in CCRIS.
6. If my credit card outstanding balances is converted to a term loan/financing, can I still use my credit card?
Yes, if your card account is in arrears for 90 days or less at the point of conversion, you can continue to use the credit card up to the remaining credit limit after taking into account the balance converted into a term loan/financing.
The outstanding balance converted into the term loan/financing is treated as part of the credit card limit. However, if your credit card account is already non-performing (in arrears for more than 90 days), your FI may have the policy to block the usage of the card.
For more information or if you have any other inquiries regarding the packages, you may contact your bank or visit www.bnm.gov.my or contact the BNMTELELINK at 1-300-88-5465 (Monday – Friday, 9.00am – 5pm).