KUALA LUMPUR (March 24): Automatic moratorium on loan repayments will be granted to small and medium enterprises (SMEs) and individuals — an additional measure taken by Bank Negara Malaysia to relieve the burden on businesses and households that are expected to be affected by the Covid-19 outbreak.

The central bank has written to the commercial bank to inform them of the new measure that will last for six months. However, the loan and interest repayments accrued during the six months will not be waived.

In a document sighted by The Edge, BNM noted that to ease the cash flow of SMEs and individuals that will be affected by the Covid-19 outbreak, banking institutions will grant an automatic moratorium on all loans/financing repayments/payments, principal and interest (except for credit card balances) to individuals and SME borrowers/customers for a period of six months from April 1, 2020.

The automatic moratorium is applicable to the loans/financing that are not in arrears exceeding 90 days as at April 1, 2020 and denominated in the ringgit, it added.

“Banking institutions should provide individuals and SMEs with adequate information on how the suspended loan or repayments will be treated during the moratorium period and options for the borrowers/customers to resume repayments/payments after the moratorium period, particularly if they anticipate that they may still face some difficulty meeting scheduled repayments/payments,” BNM said in the letter.

As for outstanding credit card balances, BNM said banking institutions shall offer customers the option to convert their credit card balances into a term loan/financing of a tenure of not more than three years and an effective interest/profit rate of not more than 13% per annum.

“The implementation of the Net Stable Funding Ratio (NSFR) requirement shall continue to be effective on July 1, 2020. However, the minimum NSFR requirement applicable on July 1, 2020 is lowered to 80%. Banking institutions shall maintain a minimum NSFR requirement of 100% from September 2021,” the letter stated.

The Edge has reached out to BNM on this and will update the central bank’s response.