Don’t abdicate responsibility, make banks extend loan moratorium, MTUC tells BNM

MTUC says the finance ministry and Bank Negara Malaysia should stop making excuses for the banks.

PETALING JAYA: MTUC today called on the finance ministry and Bank Negara Malaysia (BNM) to use their clout to ensure banks extend the moratorium on housing and vehicle loans by at least another six months.

Its secretary-general J Solomon said this should be done especially for the targeted group of workers who were still unable to service the loans, including many of the 800,000 workers who have lost their jobs since April and thousands more forced to take pay cuts or go on unpaid leave.

Solomon urged the ministry and BNM to stop making excuses for the banks, which had been making huge profits in the past, and to side with the workers. If needed, he said, the Prime Minister’s Office should step in.

“For banks to adopt a ‘business as usual’ attitude and expect workers who are still mired in job losses and with little or no income to resume paying their loans is a downright cruel and inhumane act against the borrowers,” he said in a statement.

“Extending the moratorium by a further six months will not harm the bottom line of the banks, but will instead go a long way to help the poor and downtrodden workers.”

He was commenting on a BNM statement yesterday that financial institutions were unlikely to extend the six-month moratorium on payment of monthly instalments for vehicles and housing loans which end on Sept 1 and that BNM had “no intention of extending the moratorium as it would have repercussions that we want to avoid”.

Earlier, Finance Minister Tengku Zafrul Aziz had said it would be up to the banks to extend the loan moratorium if they wished.

Solomon said the opening up of the economy was a slow process and it would take time for workers to get back on their feet and service their loans.

He said that if the banks persisted in collecting the loan repayments, “we can expect to see record forfeitures of vehicles and homes of the working class which will inflict untold misery on them and their families”.

“Clearly, the finance ministry and BNM must not abdicate their responsibility to ensure that the moratorium is extended another six months to all B40 and M40 groups as well as all workers who have lost their jobs irrespective of their salary scale.

“The same extension should also be given to companies with loan facilities who are struggling to keep afloat during this pandemic .

“MTUC urges MoF and BNM to stop mollycoddling the banks. There is no question of banks incurring losses because of the moratorium.

“The loans are not written off but the instalment payments merely need to ‘be deferred’ until the economy normalises. There are no losses to speak of, merely a temporary deferment of monies that would be returned to the banks’ coffers,” he said.

He said BNM assistant governor Adnan Zaylani Mohamad Zahid’s claim that the six-month moratorium granted in April had cost financial institutions some RM47.5 billion was nothing more than an attempt to “twist the facts and pander to the interest of the financial institutions”.

“If at all, only a reduction in profits is possible due to loss of reinvestment interest and liquidity cost. Loss of reinvestment interest, in any event, was inevitable given the drawback due to the pandemic. In that sense the question of losing reinvestment interest is no justifiable cause.

“Therefore, what cannot be comprehended is how BNM arrived at the RM47.5 billion loss arising only due to liquidity cost,” he said.

Solomon said that in 2019, as in previous years, all banks in Malaysia recorded multi-billion ringgit profits. He noted that both the finance minister and BNM had repeatedly said the banking sector remained strong with more than adequate financial liquidity.

“Bank Negara figures show that the banking system’s excess capital and liquidity stands at RM159 billion and RM199.6 billion, respectively, above the regulatory minimum levels.

“According to BNM, this has enabled banks in Malaysia to play a leading role in assisting households and businesses to recover from the Covid-19 pandemic shocks.”

He said this pointed to a strong and vibrant banking sector that would be easily able to grant a further six-month extension to needy Malaysians.

“The banks have a moral obligation to do this and both the finance ministry and BNM must stop making excuses for them not to do so.

“It is not enough nor right for Tengku Zafrul to say that he is encouraging banks to grant the moratorium extension to targeted groups but in the same breath claim that banks have the final say.

“The government and BNM have more than enough powers and clout to direct the banks to grant the extension and, as such, must stop being evasive about it. If necessary, the Prime Minister’s Office must intervene for the sake of the rakyat,” he said.

Solomon said the six-month moratorium had helped workers tremendously in managing their tight cash flow and household expenses.

By compelling these workers to resume paying their loan instalments from October, the banks and the government would be destroying the goodwill and credibility they had earned, he said.

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