MTUC Urges for the Extension of Loan Moratorium

The Malaysian Trades Union Congress (MTUC) has advised the Finance Ministry and Bank Negara Malaysia (BNM) to work hard in ensuring banks extend the loan moratorium by at least another six months, especially for the targeted group of workers who are still incapable of paying off the loans.

In a statement, MTUC secretary-general J. Solomon said this would involve most of the 800,000 workers who were retrenched until April this year and thousands more who were ordered to take deep pay cuts or go on unpaid leave by their companies.

He said for banks to adopt a ‘business as usual’ attitude and demand workers, who are still entangled in job losses and with limited or no income to continue paying their loans, is unfair for the borrowers.

"The official statistics clearly show that many workers have been rendered unemployed due to the economic downturn caused by the COVID-19 pandemic and the opening of the economy is an ongoing, albeit, slow process and it will take time for workers to get back on their feet and service their loans.

"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," Solomon said.

He said the BNM and government must not forgo their responsibility to ensure that the loan moratorium is continued for another six months to all Bottom and 40Middle 40 groups, and all workers who have lost their jobs regardless of their salary range. 

The very extension should also be given to organisations with loan facilities which are trying to stay afloat during this pandemic, he added.

Solomon said there is no question of banks acquiring losses because of the loan moratorium, however, the loans are not written off but the instalment payments are simply delayed until the economy returns to normal. 

"If at all, only a reduction in profits is possible due to the loss of reinvestment interest and liquidity cost. Loss of reinvestment interest, in any event, is inevitable given the drawback due to the pandemic. 

In 2019, all the banks in Malaysia recorded multi-billion ringgit in profits, as had been the case for so many years. In facing the recent pandemic, both the BNM and Finance Ministry have repeatedly stated the banking sector persisted strongly with more than sufficient financial liquidity.

Solomon said BNM figures revealed that the banking system's excess capital and liquidity stands 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 COVID-19 pandemic shocks.
"These point to a strong and vibrant banking sector that is easily able to grant a further six-month extension to needy Malaysians," he said. 

Recently, BNM said it was doubtful that financial institutions would extend the six-month loan moratorium on payment of monthly instalments for vehicles and housing loans which will end on 30 September 2020.

Source: Daily Express

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