Banking on compassion and help during lockdown

To be haunted by loan repayments during these tough times would be the unkindest cut of all

37 views
Compassion - Photo: Reeding/Flickr

Finance Minister Tengku Zafrul Tengku Abdul Aziz’s contention that the government does not have the power to compel banks to offer a blanket loan moratorium to Malaysians during the current lockdown, predictably received a backlash from various quarters.

Expressing disbelief, detractors such as certain politicians and concerned Malaysians, rightly argued that the emergency declaration that the government sought and gained early this year should give it enough legal and political muscle to persuade the banks to provide a loan moratorium, especially for those needing it.

Apart from the emergency powers, Umno Youth leader Asyraf Wajdi Dusuki argued there are existing laws that empower the government to impose moratorium, such as Section 72 of the Central Bank of Malaysia Act 2009 (Issues of Policy), which gives power to the government to overrule or cancel any decision made by Bank Negara.

Additionally, Asyraf said that Sections 6 (regulatory objectives) and 7 (powers and function of bank) of the Financial Services Act 2013 empowers the finance minister to instruct the central bank on policies related to finance and banking.

We are mindful that a six-month blanket moratorium was implemented in March 2020 soon after the first movement control order was enforced. This moratorium was carried out by the government even without the legal force of emergency rule at the time.

The call for such a blanket moratorium this time around resonates with sentiment on the ground, particularly among the economically vulnerable who consider such loan deferments as a crucial band-aid. To be sure, other items in the recently announced Pemerkasa+ stimulus package are equally useful.

READ MORE:  When desperation grips the people

While it is appreciated that the current targeted loan moratorium is aimed at helping the lower-income group, those who recently made jobless and small businesses that cannot operate during the lockdown, it is argued that this list excludes other people who have, for instance, other financial commitments such as medical expenses and pay cuts – and therefore are having difficulties in making loan repayments and hire purchase instalment payments.

Bus operators, for example, also face hardship. They cannot operate their buses during the lockdown and, hence, many of them reportedly have to depend on side incomes, such as tapping rubber, working at food stalls or driving taxis. With unstable wages, they cannot repay their loans or pay their hire purchase instalments.

The problem is that some of these bus operators got their loans or hire purchase deals from certain credit companies that are not registered with the Ministry of Housing and Local Government and who do not participate in the Bus and Taxi Hire Purchase Rehabilitation Scheme. That is why the bus operators called on all credit companies to adopt a loan moratorium to help tide them over.

Muar MP Syed Saddiq Syed Abdul Rahman said despite last year’s moratorium, banks were still able to make handsome profits in the first quarter of the year. For example, The Edge Markets reported recently that CIMB Group Holdings Bhd recorded its highest ever quarterly net profit in the first quarter ended 31 March this year, registering earnings of RM2.5bn from RM508m a year before.

READ MORE:  Covid year: Topsy-turvy and gains

In bad times, such as the one we’re all facing, it is hoped that the banks and credit companies would consider it their “national service” to help the less fortunate in society by allowing them to defer their loan repayments. A little help of this nature won’t kill the banks.

It is already bad enough for some people to have been made jobless, incur pay cuts or struggle to make ends meet. To be haunted by loan repayments amid all this is the unkindest cut. – The Malaysian Insight

Thanks for dropping by! The views expressed in Aliran's media statements and the NGO statements we have endorsed reflect Aliran's official stand. Views and opinions expressed in other pieces published here do not necessarily reflect Aliran's official position.

Our voluntary writers work hard to keep these articles free for all to read. But we do need funds to support our struggle for Justice, Freedom and Solidarity. To maintain our editorial independence, we do not carry any advertisements; nor do we accept funding from dubious sources. If everyone reading this was to make a donation, our fundraising target for the year would be achieved within a week. So please consider making a donation to Persatuan Aliran Kesedaran Negara, CIMB Bank account number 8004240948.
Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments