Targeted Repayment Assistance better serves borrowers' needs

Bank Negara Malaysia (BNM) wishes to assure borrowers that repayment assistance will remain available for borrowers whose incomes have been affected by the pandemic. Depending on their circumstances, borrowers facing challenges have generally requested for reductions in monthly repayment instalments or an extension of the moratorium. Borrowers who declined repayment assistance for now would still be able to apply for targeted assistance throughout 2020 and into 2021 if their financial circumstances change in the future.

The scale of targeted repayment assistance is unprecedented in Malaysia’s banking history. Assistance continues to be offered to borrowers across a range of income groups, with special consideration given to households from the B40 category, micro businesses as well as borrowers affected by movement restrictions.

A targeted approach is in the interest of borrowers, savers and the economy

A targeted approach to repayment assistance extends relief measures more sustainably, while lending strength to the economic recovery.

• Many borrowers are now able and have started to resume repayments. For this group, resuming repayments would be in their interest as this would reduce the overall cost of borrowings. If their financial circumstances change down the road, targeted repayment assistance would still be available.
• Borrowers who require assistance at this time have the opportunity to customise their repayment plans based on what they can afford. If their circumstances are further challenged in the future, they would have more recent repayment records to facilitate further assistance by banks.
• The financial resources of the banking system can be prioritised to help those most affected by COVID-19. As more borrowers who can afford to repay do so, more assistance can be made available to borrowers that need it.
• Banks have been entrusted by the public to manage their savings. The public, as depositors, expect that banks discharge their fiduciary obligation by managing these funds prudently and using them to provide loans to the economy for productive purposes. In addition, banks source capital from institutional funds, such as those managing the pensions, retirement funds and investments of Malaysians. It is therefore important to preserve a healthy credit culture where borrowers who can afford to repay do so.

What to expect when applying for repayment assistance

BNM urges affected borrowers to come forward to apply for repayment assistance with their banks through the various channels available.

Banks are required to respond to applications for targeted repayment assistance within 5 days for individual borrowers and within 14 days for SME borrowers. Borrowers who do not receive a response from their banks within these timeframes should contact BNMTELELINK (bnm.my/RAsurvey).

Borrowers affected by any Conditional Movement Control Order (CMCO) or Enhanced Movement Control Order (EMCO) can expect a prompt and seamless process even as banks in affected areas continue to operate under appropriate SOPs. Those unable to have face-to-face engagements or furnish documents due to movement restrictions can contact their banks via website, phone or email.

AKPK also stands ready to provide the necessary advice and assistance to both individual and SME borrowers, including options for debt restructuring. For borrowers that were already facing financial difficulties prior to the pandemic, a moratorium extension is not a sustainable solution. In these circumstances, borrowers can also approach AKPK for assistance.

Targeted repayment assistance puts borrowers on a sustainable recovery path

The banking industry has been actively reaching out to borrowers in various ways, including through TV, radio, news outlets, social media and repayment assistance campaigns across the country. Banks have also reached out directly to borrowers assessed to require repayment assistance through calls, emails and SMS.

More than 640,000 applications for repayment assistance have been received, with an approval rate of around 98%. The types of packages offered by banks reflect the financial needs and circumstances of the borrowers.

Of those approved:

• 40% were granted an extension of the moratorium. These consisted mainly of individuals who have been recently made unemployed, as well as businesses in sectors that may still be experiencing significant operating constraints caused by the pandemic.
• 60% received a reduction in instalments. Borrowers who have requested a reduction in instalments includes those in the B40 group. These instalment reductions put individuals and SMEs on a path to start paying down their loans, at levels which they are comfortable with.

Among individuals who requested repayment assistance to date, about 50% have a monthly income of RM5,000 or less. Meanwhile, 28% are those with a monthly income between RM5,000 to RM10,000. Borrowers in other segments who need assistance are also being supported, including those who earn variable incomes, and those employed in sectors that have been hardest hit such as the tourism sector.

Additional information

• Applications for repayment assistance at any time before 30 June 2021 will also not appear on a borrower’s CCRIS records.
• There are no processing fees/charges associated with applications for repayment assistance for individual and SME borrowers.
• To obtain targeted assistance, borrowers need to apply directly to their respective banks.
• Visit https://www.bnm.gov.my/tra for more information on whether you need targeted assistance and qualifying assistance.

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