Banks to inform borrowers on loan moratorium

PETALING JAYA: Bank customers with hire-purchase (HP) loans and fixed rate Islamic financing will receive a notification starting tomorrow via SMS, email or registered mail on the necessary steps that they need to take to complete the process of deferring their loan/financing payments under the six-month moratorium.

Bank Negara Malaysia (BNM) has required banking institutions to take appropriate steps to ensure that borrowers are provided with clear information on the process and changes to the terms of their agreements, as well as convenient means to conclude these agreements in view of the movement control order (MCO).

“Banking institutions will also provide to each borrower/customer specific details of changes to the terms of his/her HP loan or fixed rate Islamic financing agreement. This should contain information on the revised payment schedule and any changes to payment amounts, including those arising from normal interest/profit rate accrued during the moratorium,” BNM said in a statement today.

Borrowers/customers who do not wish to take up the moratorium can still choose to do so at this time by informing their banking institutions and resuming their scheduled payments based on the terms of their existing agreements. In such a case, borrowers/customers will be given reasonable time by banking institutions to regularise any outstanding scheduled payments that were earlier deferred under the moratorium. Banking institutions will not impose overdue or late payment charges on these payments until they are due based on the revised payment schedule agreed with borrowers/customers.

On March 25, BNM said banking institutions are in the process of formalising agreements to reflect the revised payment terms with customers with HP loans and fixed rate Islamic financing for the six-month moratorium, from April 1 to Sept 30, 2020, on loan/financing payments.

This is to comply with the procedural requirements under the Hire-Purchase Act 1967 and syariah requirements which are applicable to any changes that are made to the terms of these agreements, including changes to the payment schedules and/or amounts as a result of the moratorium.

In line with BNM’s announcement, the Association of Banks in Malaysia (ABM) said its members will reach out to their respective HP customers to notify them of the procedures to complete their processing for the moratorium.

ABM pointed out this is not applicable to customers who have already notified their banks of their decision to continue their existing monthly instalments, and they do not have to take any further action to restate their decision.

On the other hand, all customers who wish to take up the moratorium are now required to formally confirm the same with their respective banks upon receipt of communication from their banks.

“ABM members will communicate with their impacted customers on the exact procedures they will need to follow to take up the moratorium as well as the instalment payment options available to them once the six-month moratorium is over.”

Customers who have opted to take up the moratorium can choose to pay the accumulated six months deferred installments together with their October 2020 installment without being charged any additional interest; or continue the repayment of these instalments post October 2020 through an extension of six months in repayment period after the original maturity date.

ABM pointed out that in the case of the latter option, interest based on the contractual rate will be charged on the amount of the deferred instalments that remains outstanding until these instalments are fully repaid, which should be by the end of the extended six-month tenure.

Banks will also communicate the relevant deadlines as well as the method they will adopt to ensure minimal inconvenience to customers on the acceptance process.

ABM member banks encouraged their customers to utilise their respective bank’s online banking platform to digitally indicate their acceptance to the moratorium and agreement to its terms, where possible.

It also cautioned that HP customers who do not formally accept the moratorium upon receipt of notification from their banks will be considered as not taking up the moratorium and must continue to pay their monthly instalments as usual according to their original schedule.

“However, our member banks will not impose any additional interest charges nor late payment fees for instalments that remain outstanding for April and May 2020 by HP customers who had deferred their monthly instalment payment, provided that payment for April, May and June 2020 are made no later than June 30, 2020,” said ABM.

If the payments are not made by June 30, 2020, it warned that the accounts will go in arrears and late payment charges will start accruing from July 2020 onwards.

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