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In our efforts to cushion the impact of disruptions caused by COVID-19 outbreak, Bank Negara Malaysia (BNM) wishes to announce additional measures to support SMEs and individuals.
A. Enhancements to Financing Facilities to Assist Affected SMEs, Safeguard Jobs and Support Growth
BNM is enhancing the existing financing facilities under the BNM’s Fund for SMEs (the Fund), and increasing the allocation of the facilities by an additional RM4.0 billion to RM13.1 billion. These enhancements are aimed at providing assistance to more SMEs in sustaining business operations and preserving jobs, as well as to support economic growth.
The enhancements under the Fund entail the following:
1. An increase in the allocation of the Special Relief Facility (SRF), from RM2 billion to RM5 billion, to provide relief assistance to more SMEs who are affected by the COVID-19 outbreak. The maximum financing rate is now lowered from 3.75% p.a. to 3.50% p.a. The enhanced SRF is available until 31 December 2020.
2. An increase in the allocation of the All Economic Sectors (AES) Facility, from RM5.8 billion to RM6.8 billion, to enhance access to financing for SMEs and to support growth. The maximum financing rate is also reduced from 8% p.a. to 7% p.a.
In addition to the above, SMEs can also avail themselves to 3 other facilities under the Fund, namely the Automation and Digitalisation Facility (ADF), Agrofood Facility (AF) and Micro Enterprises Facility (MEF). Detailed features of the facilities under the Fund are attached.
Interested SMEs may call or email the participating financial institutions (PFIs) or visit the business financing referral platform at imsme.com.my, to apply for the financing. The PFIs are commercial banks, Islamic banks and development financial institutions regulated by BNM. SMEs can also avail themselves to Credit Guarantee Corporation Malaysia Berhad’s (CGC) BizMula-i and BizWanita-i schemes for financing of up to RM300,000.
Participating financial institutions can also seek guarantee coverage from CGC or Syarikat Jaminan Pembiayaan Perniagaan (SJPP) for these facilities.
The SRF, AF and ADF were announced as part of the first economic stimulus package on 27 February 2020. Since these facilities were made available on 6 March 2020, participating FIs have approved a total of RM119 million of financing to 196 SMEs, with an approval rate of 84%.
Participating FIs will continue to process the applications received under these facilities, although there may be some delays in the applications and disbursements process due to the limitations arising from the Movement Control Order.
B. Programme to Support the B40 Segment in Generating Sustainable Income and Achieve Financial Resilience (iTEKAD)
To further facilitate access to funding and help build entrepreneurship capability among B40 micro-entrepreneurs, a social finance programme will be introduced by participating Islamic banks in collaboration with some State Islamic Religious Councils (SIRCs) and implementation partners.
Social finance (zakat, waqf and sadaqah) offers significant potential to facilitate distribution of funds in a more balanced and inclusive manner. The programme is designed to mobilise social finance contributions towards providing seed capital that is packaged with microfinancing for eligible micro-entrepreneurs to start and grow business to generate sustainable income.
As a start, Bank Islam Malaysia Berhad (BIMB) will be the first participating Islamic bank to pilot the iTEKAD programme beginning May 2020. The initial programme optimises zakat and microfinancing arrangement, and will include cash waqf at the later stage. The implementation of the programme involves on-boarding and educating recipients as well as monitoring their success which will be undertaken in collaboration with Majlis Agama Islam Wilayah Persekutuan (MAIWP) and SME Corporation Malaysia (SME Corp). In addition to obtaining funds to start the business, the selected recipients will also receive structured training on entrepreneurship and financial management by SME Corp, and support to develop a viable business venture of their choice. BIMB will be providing further details on the programme, in particular the mechanics and features as well as application process in due course. After the pilot, the Bank plans to roll-out the iTEKAD programme to more financial institutions and in more states.
C. Relief measures for affected policyholders and takaful participants
1. Deferment of payment of life insurance premiums and family takaful contributions
Life insurers and family takaful operators will allow affected  policyholders and takaful participants an option to defer the regular premium/contribution payments due under life insurance policies and family takaful certificates for three months without affecting the policy coverage. This flexibility may be provided by life insurers and family takaful operators through a no-lapse guarantee, an extension of grace period or any other means that maintain the policy/certificate intact during the deferment period. This option will be available from 1 April 2020 until 31 December 2020.
2. Extension of flexibilities to reinstate or preserve life insurance and family takaful protection
Additionally, life insurers and family takaful operators will also provide the following assistance to the affected policyholders and takaful participants until 31 December 2020:
i. Extend the period during which a policyholder and takaful participant can reinstate a policy/certificate that has lapsed;
ii. Provide options to enable policyholders and takaful participants to continue to meet their premium/contribution payments and maintain their policies/certificates. This may include changes in the sum assured/covered, adjustments to the premium/contribution structure and conversion into a paid up policy;
iii. Waive fees and charges imposed for changes made to policies/certificates; and
iv. Waive any penalties/consequences for late payments of premiums/contributions, particularly where policyholders/takaful participants are unable to access electronic payment channels during the Movement Control Order.
3. Flexibility to meet general insurance premiums and general takaful contributions
General insurers and general takaful operators will facilitate requests for flexibilities by affected policyholders and takaful participants to meet their premiums/contributions due during this period to ensure continued risk protection for their properties and businesses. This may include working with policyholders/takaful participants to restructure their policies/certificates so as to reduce the amount of premiums/ contributions payable.
4. Expedited claims processing
All insurers and takaful operators will expedite and facilitate claims processes related to COVID-19. Priority will be given to the issuance of guarantee letters, waivers of applicable waiting periods and processing of claims payments.
Policyholders and takaful participants are advised to contact their insurers and takaful operators to avail of these flexibilities provided to manage their policies and certificates.
5. Additional Regulatory and Supervisory Measures
The Bank will be reducing the interest rate (IRCC) and profit rate (PRCC) stress factor caps applied under the Risk-Based Capital Framework for Insurers and Risk-Based Capital Framework for Takaful Operators (Frameworks), respectively. The IRCC and PRCC caps will be reduced from 40% to 30% with effect from 31 March 2020, to better reflect the changes in the prevailing market conditions since the stress factors were first set in 2009.
In addition, the Bank will consider submissions from insurers and takaful operators to adopt alternative methodologies for calculating the interest rate and profit rate risk charges.
These changes are in line with planned enhancements to improve the risk capture and overall consistency of the Frameworks.
The Bank will also be extending the timeline for all ongoing consultations on published discussion papers and exposure drafts to 30 June 2020. Flexibilities will also be provided for insurers and takaful operators to meet timelines for regulatory submissions to take into account the efforts being undertaken by the Government to contain the spread of COVID-19.
 Refers to individuals who have been infected, home quarantined or suffered a loss of income; and small and medium enterprises (SMEs) which have suffered a loss of income, as a result of the economic impact of the COVID-19 situation. Examples of events that lead to such loss of income include retrenchment, shorter working hours and salary or commission reductions for individuals; and loss of business income for self-employed and SMEs.
Bank Negara Malaysia
27 Mar 2020
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