KUALA LUMPUR, Sept 24 — Malaysian borrowers who have gotten used to having more cash to spend during the six-month moratorium or temporary suspension of loan payments should adjust their spending levels from next month onwards, as their disposable income will be reduced, local banks and a debt management agency have advised.

Bank Islam CEO Mohd Muazzam Mohamed urged borrowers to be prepared to review their spending levels as they would have to resume repaying their loan installments when the loan moratorium ends next Wednesday.

"We also understand in the last six months, probably in terms of spending patterns could have changed for some people, because whatever disposable income could have increased for some people because there’s no deduction for loans and all that.

"And expenditure patterns could have changed, so this is also the time for them to revisit their financial planning for them to resume repayment from October onwards,” he said during a roundtable with senior officials of banks and the Credit Counselling and Debt Management Agency (AKPK) and the media here yesterday.

As for borrowers who face difficulties paying their monthly loan commitments once the loan moratorium expires on September 30 due to the economic effects of the Covid-19 pandemic, they are advised to visit the banks to work out flexible loan repayment arrangements.

The banks said they are even opening their branches on weekends in a drive to get borrowers to apply for help in loan repayments before September 30, with various offers available depending on the situation including an extended three-month loan moratorium for those who lost their jobs this year, and reducing loan monthly installments for those who have suffered a pay cut, or even allowing borrowers to pay only the interest for a certain period of time.

For borrowers that are unsure if the help offered by banks to repay their loans are suitable, Bank Negara Malaysia has suggested five questions that they could ask their bank, namely how would the repayment assistance affect their loan tenure, whether it increases their total borrowing cost, what borrowers can do to reduce their borrowing cost when they are in a better financial situation, how long will the bank take to process the application, and who the borrowers can contact if they have not heard back from the bank. Bank Negara said borrowers can contact BNMTELELINK via 1-300-88-5465 or bnmtelelink@bnm.gov.my if their banks have been unresponsive to their queries or application.

However, local banks assured Malaysians that they are ready to help them with their loan repayments with various communication channels available including on online platforms, and also highlighted the high approval rate of 98 per cent of the 380,000 borrowers in Malaysia who have to date applied for loan repayment assistance.

The application process for loan repayment assistance from the banks is estimated to take between one to five days for individual borrowers, and between three days to two weeks for small and medium enterprises (SMEs).

Banks have urged borrowers not to wait till the "last minute” but to do it before the September 30 deadline to enable their applications to be processed earlier and avoid being overdue with the resulting negative information on their credit profile.

Bank Rakyat CEO Datuk Rosman Mohamed highlighted that the automatic loan moratorium expiring on September 30 would mean that borrowers have to start making repayments as usual if they had not applied for any loan repayment assistance.

As example, he said borrowers who are civil servants would see their salaries automatically deducted again from October 1 to pay for the loan installments. As such, their disposable income will return to pre-moratorium levels.

For those who want further advice whether as an individual or SME borrower, they can approach the Credit Counselling and Debt Management Agency (AKPK) to get free advice in situations such as when their application for loan repayment assistance has been turned down or if they do not agree with the aid offer by the bank. AKPK is an agency set up by Bank Negara Malaysia in 2006 to help Malaysians to take charge of their finances and also manage their debts.

AKPK CEO Azaddin Ngah speaks during a media roundtable with CEOs and AKPK in Sasana Kijang September 23, 2020. — Picture by Miera Zulyana

AKPK CEO Azaddin Ngah said that the agency had over the last four months constantly reminded Malaysians that they need to seek help early and act now to plan their finances before the automatic loan moratorium ends.

"We are constantly reminding the public to reassess their financial position and look out for targeted assistance via R&R [restructuring and rescheduling loans] by the bank and through us at AKPK. Now in our communication, our constant messaging has been — go to the bank and discuss your repayment.

"However, we act as a last resort, in the sense, if for example, the public wants independent advice and also [if] the assistance from the bank’s proposals probably not meeting their cashflow and also they have multiple borrowings, then you should come to AKPK for us to assist you,” he said.

Azaddin said AKPK would take a holistic approach when assisting borrowers, such as by looking at all the loans that they have with various banks to work out how best to ease the borrowers’ cashflow, as well as addressing the cause of loan defaults through counselling and education.

Azaddin said that attaining peace of mind in managing one’s finances may involve cutting back on spending in order to be able to make loan repayments at a comfortable level.

While noting the perception of the stigma attached to approaching AKPK for help and advice, Azaddin pointed out that not all who visited came to seek help for debt management, pointing out many came just to take stock of their financial position.

Apart from helping those who have lost their income or suffered a reduction in income, AKPK also helps those with high financial commitments, he said.

Azaddin said AKPK had also over the past few months engaged with those in several sectors such as the aviation, hotel, and media industries to see how the agency could help those affected economically by the Covid-19 pandemic.

He also highlighted that AKPK’s free services in providing advice and helping with debt management are also open to SMEs, and not just individuals.

"At the same time, from September 1, the Small Debt Resolution Scheme has been transferred to AKPK, so from now on, [SME] will be able to seek APKP’s help as well. After you have gone to the bank, we will be able to help to provide additional avenues for SME to have advice especially in debt restructuring, which I believe complements the banking industry,” he said.