For many Malaysians the declaration of the 6-month automatic deferment of all loans by Bank Negara Malaysia (BNM) has been greeted with relief. At a time when work stability in Malaysia and across the globe is inexistent, the decision to give no fines for failure to pay off a significant monthly contribution is also a good news.
However, a bit of uncertainty and ambiguity remain on the matter. What precisely is the deferment going to change the terms of our present lending? Is the deferment duration still charging interest? How big is the declaration over the deferment period that banks suspend compounding interest?
Here’s what the Bank Negara Malaysia (BNM) has recommended that banking institutions take reasonable measures to ensure that lenders provide specific updates on the mechanism and modifications to the terms of their agreements, as well as suitable ways of resolving these agreements in the light of the Movement Control Order (MCO).
In view of BNM’s announcement, the Association of Banks in Malaysia (ABM) remarks its representatives would reach out to their respective HP clients to remind them of the procedures for completing their moratorium collection.
ABM points out that this will not extend to consumers who have already told their banks of their intention to maintain their current monthly payments, and do not need to take any further steps to restate their intention.
At the other hand, all clients who plan to take up the moratorium are now expected to officially confirm the same with their respective banks upon receipt of their banks’ correspondence.
In the case of the options, interest on the basis of the contracted rate would be levied on the amount of unpaid instalments that remain outstanding until such time as those instalments are entirely repaid, which will be at the conclusion of the extended six-month period.
Banks must also disclose the applicable deadlines as well as the approach they must follow to ensure that consumers have minimum annoyance during the acceptance process.
ABM member banks allowed their customers to use the electronic banking site of their respective bank to show digitally their approval of the moratorium and, where possible, their commitment to its terms.
To ensure the said plan, they also warned that any consumers who do not officially embrace the moratorium after receipt of notice from their banks would be deemed not to take up the moratorium and will continue to pay their monthly installments as usual according to their original plan.