MTUC: BNM ‘inhumane’ for allowing banks to charge accrued interests during moratorium

KUALA LUMPUR, May 1 — Bank Negara Malaysia (BNM) has been accused by the Malaysian Trade Union Congress (MTUC) of being inhumane in its move to affirm that interests of loans accumulated under the six-month moratorium will still be charged to the borrowers.

MTUC said the move to charge borrowers with interests accumulated over the period was equivalent to ‘daylight robbery’ on borrowers whose finances are already stretched thin during the Covid-19 pandemic period.

“BNM and the banks add insult to injury by stating that borrowers would not pay any interest if the deferred loan payments are settled in October, at the end of the moratorium period. 

“How many people in the present day would have the means to do so, given the economic fallout,  job retrenchments along with pay cuts that are taking place across the country.

“This is an inhumane move by BNM and banks to further squeeze consumers in every way possible, without any regard for the welfare of the people,” MTUC secretary-general J. Solomon said in a statement today. 

MTUC called for BNM to rescind the approval given to commercial banks to levy the interests on borrowers opting for the moratorium, and further pressed the central bank to justify the move which Solomon pointed out contradicts the government’s promise that it would ensure all efforts to lighten the burden of the people.

Solomon urged Prime Minister Tan Sri Muhyiddin Yassin to summon the central bank governor to demand an explanation and to justify what he called as BNM conniving with accomplices to impose ‘penalties’ on those who failed to settle the deferred payments after the moratorium ends.

“By far, this is the unkindest cut by the banks and BNM on the public, many of them who are workers suffering from the impact of the prolonged movement control order and the economic fallout of Covid-19.

“The government, especially the Finance Ministry must intervene and revoke this approval given by Bank Negara.

“Failure to do so will greatly damage public confidence in the government’s assurances that it would safeguard the welfare of the rakyat at all times,” Solomon wrote.

This comes as BNM yesterday clarified that interest rates during the six-month moratorium for hire purchase loans would still be accrued and accumulated into the overall owed amount.

BNM’s clarification comes amid confusion over the legal processes to trigger the moratorium, with certain quarters claiming the accrued interest rates were never mentioned when the loan deferment announcement was made.

It was later confirmed that those who opt for the moratorium on their loans would be liable to the accumulated interest rates over the six-months which will be worked into their loan repayments.