The government has announced a moratorium extension and targeted bank assistance for specific groups that are badly affected by the COVID-19 outbreak.

BACKGROUND

Prime Minister Tan Sri Muhyiddin Yassin announced last Wednesday (29 July) a moratorium extension involving those who had lost their job and workers who have had to take pay cuts during the COVID-19 outbreak.

An extension of three months is given to those who had lost their job in 2020, which can be further extended on a case-by-case basis.

As for workers who had to take pay cuts, their instalment payments would be reduced at the same rate as their salary cuts and depending on the type of loan. The assistance will be given for six months in which an extension can be given based on the individual's salary situation.

Instalment scheduling options for hire purchase loans are also offered, subject to the Hire Purchase Act.

Eligible borrowers may contact their respective bank starting Aug 7.

WHY SHOULD YOU CARE?

A moratorium on loan repayments essentially means that you do not need to meet your monthly loan payments and will not be penalised for it.

It is meant to relieve Malaysians of their financial commitment while sorting out their monthly budget during the COVID-19 outbreak, where many have undergone pay cuts or even lost their jobs.

On March 25, Muhyiddin announced a six-month moratorium ending in September which includes conversion of credit card balance to term loans and restructuring of corporate loans, all worth at least RM100 billion.

However, Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz has revealed on Monday (27 July) that the banking sector is suffering from RM1.06 billion losses per month following the six-month loan moratorium period.

By the time the moratorium period supposedly ends in September, Tengku Zafrul said the banking sector would suffer a loss of RM6.4 billion collectively.

Despite that, banks have expressed their renewed commitment to support the public as well as the economy.

According to Tengku Zafrul, over 93 per cent of Malaysians have taken the moratorium and over 95 per cent local businesses are benefitting from this initiative.

Muhyiddin has also said the newly announced moratorium extension would benefit three million individuals and small and medium enterprises (SMEs).

Besides loan deferment, Malaysia has also implemented the wage subsidy programme, namely Prihatin worth RM260 billion followed by the National Economic Recovery Plan (PENJANA) worth RM35 billion.

The government said that the wage subsidy programme has saved over 2.4 million jobs and has recently been extended for three more months.