NST : Defer compounding interest during 6-month moratorium by Datuk Dr Marimuthu Nadason
FOMCA fully supports the deferment of loan or financing repayments for the next six months.During the next six months, SMEs and households do not need to make their monthly fixed payments to the banks.This would be of tremendous benefits to consumers, as many are already facing job loss and diminishing incomes. Further, the fear and concern for the family is another burden weighing on the family.
Thus, the reduction of their monthly commitment will go a long way in helping many families, especially the low income but also the middle income to face this difficult health and economic crises.Families dipping into their savings to face the current crises, would have at least one less financial burden, as well as more to spend on food and other essentials.However, the interest will continue to accrue on the loans repayments that are deferred and consumers will need to honour the deferred repayments in the future.
Loan repayments will resume after the deferment period as for conventional loans, interests would continue to be charged on the outstanding balance comprising of both principle and the interest portion that is compounded, during the moratorium.That is the loan repayment is just deferred by six months, while the interests continue to be accrued.
FOMCA applauds some banks for making a policy not to compound the interest during the moratorium six month period. FOMCA is calling on all banks not to compound the interest during the moratorium period.Consumers are already suffering from loss of jobs, loss of income and a depressing economic future. Their fixed payments to the banks for their various loans can be a substantial burden to the family.By not compounding interests, the banks would be helping households and families, get back on their feet after this economic and health crises.
The nation is going through a health and economic crises. FOMCA calls on the financial sector to give due concern and help consumers in these difficult times to face the current and uncertain and rather bleak future.
DATUK DR MARIMUTHU NADASON
PRESIDENT, FOMCA