Borrowers will need to start repaying their loans from October onwards as the banks will not extend the automatic loan moratorium, banking sources said.
However, an industry source said while the blanket moratorium would end, banks are open to assist borrowers to restructure and reschedule their loans in a more targeted manner.
“It is estimated that there will be three million borrowers who will take that offer up, ” the source told StarBiz.
Earlier, Bank Negara was quoted as saying that the banks stood ready to assist borrowers in a more targeted manner and have reached out to borrowers to offer various forms of repayment assistance including payment of interest only, lengthening of loan tenure and flexible repayments.
Sources said that among the reasons for a no automatic and blanket moratorium was because the banks wanted borrowers to approach financial institutions to renegotiate their loans.
“The banks will have until the middle of next year to restructure and reschedule their loans, ” a source said.
The six-month moratorium, announced by Prime Minister Tan Sri Muhyiddin Yassin in late March, ends on Sept 30.
The loan moratorium period is a duration a borrower is not obligated to make monthly debt repayments to the banks.
It was initiated to relieve the burden of those directly affected by the impact of the pandemic. It was also designed to keep cash with households, given the uncertainty at the start of the Covid-19 pandemic.
The loan moratorium was a feature from the first relief package during the movement control order by the government that saw business and consumer activity basically grind to a halt, except for essential services.
However, with the rate of unemployment creeping up and some sectors are still in standstill due to the Covid-19 fallout, some quarters are concerned over borrowers’ debt repayment capability and have pushed the government to extend the loan moratorium for another six months until March next year.
The unemployment rate crept up to 5.3% in May from 5% in April. Last year, the unemployment rate averaged just slightly over 3%.
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