July 4, 2020 @ 2:11pm
KUALA LUMPUR: Banks must be compelled to extend their Covid-19 loan moratorium for Malaysian consumers and businesses by six months, as failure to do so will see a record number of forfeitures.
Malaysian Trades Union Congress (MTUC) secretary-general J. Solomon said the government and Bank Negara Malaysia (BNM) must implement the extension, as many are unable to service their loans under current conditions.
He said this includes the 800,000 workers who lost their jobs in April, and the thousands more who were forced to go on unpaid leave or take pay cuts.
"There should not be any doubt on the part of the government, especially the Finance Ministry and BNM, that a large slice of the workforce is far from ready to resume servicing their car and housing loans.
"If the banks persist in 'collecting', then we can expect to see record forfeitures of vehicles and homes of the working class, which will inflict untold misery on them and their families," he said in a statement today.
Solomon said the ministry and BNM must not abdicate their responsibility to ensure that the moratorium is extended.
He said the same extension should also be given to companies that are struggling to keep afloat during this pandemic.
Solomon was commenting on the central bank's statement that there will no extension to the moratorium; and Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz's comment on June 28 that it is up to individual banks to extend loan moratoriums in a targetted manner.
Solomon also urged the ministry and BNM "to stop mollycoddling the banks".
"There is no question of banks incurring losses because of the moratorium, as loans are not written off the instalment payments, as they are merely deferred until the economy normalises.
"There are no losses, merely a temporary deferment of monies that would be returned to the banks' coffers."
He described BNM assistant governor Adnan Zaylani Mohamad Zahid's statement that the six-month moratorium since April has cost financial institutions some RM47.5 billion as a bid to "pander to the interests of the financial institutions."
Solomon said a reduction in profits would only be possible due to loss of reinvestment interest and liquidity costs which are inevitable due to the pandemic.
He said this is not a justifiable cause and questioned how the central bank arrived at the figure on liquidity cost.
Solomon said in 2019, all the banks in Malaysia recorded multi-billion ringgit profits and the trend was consistent for many years.
He also said Tengku Zafrul and the central bank had repeatedly said the banking sector remains strong, with more than adequate financial liquidity.
"BNM figures (alone) show that the banking system's excess capital and liquidity stand at RM159 billion and RM199.6 billion respectively, above the regulatory minimum levels.
"According to BNM, this has enabled banks in Malaysia to play a leading role in assisting households and businesses to recover from the pandemic's shocks."
He said, as attested by the central bank itself, all indicators point to a strong and vibrant banking sector – making it easy for banks to grant a six-month moratorium extension to Malaysians.
Solomon said it is inhumane to push Malaysians to service their loans while they are struggling to get back on their feet.
"The banks have a moral obligation to do this and both the Finance Ministry and BNM must stop making excuses for them not to do so."
Solomon also said Tengku Zafrul should not be encouraging banks to grant an extension only to targetted groups, and telling them that they have the final say.
He said the government and BNM have sufficient power to direct banks to grant the extension and as such, must stop being evasive about it.
"If necessary, the Prime Minister's Office must intervene for the sake of the people.
"By compelling workers to resume paying their loan instalments from October, the banks and the government will only be destroying the goodwill and credibility they have earned thus far in the eyes of the people.
"Extending the moratorium by a further six months will not harm the bottom line of the banks, but instead, go a long way to help poor and downtrodden workers."