Targeted Repayment Assistance: Everyone Can Apply!

Moratorium

Malaysia is one of the earliest countries in the world to introduce an automatic bank loan moratorium initiative where bank loan repayments are deferred for 6 months to ease the financial burden among people and businesses. This initiative has also been extended to allow applicants applying an additional moratorium for 3 months or a rescheduling of loan repayments for 6 months.

Bracing through the COVID-19 pandemic has proven to be difficult for many rakyat and micro businesses. The many uncertainties are due to, among others, mutating variants that have made it extremely challenging to completely control the pandemic. This has resulted in closed economic sectors, threatening livelihoods which could potentially plunge many towards indebtedness

Vivek Acharya, a local barbershop owner, was forced to contemplate closing his business since his store was not allowed to operate during the movement control order (MCO). Banks recognise the continued challenges faced by some borrowers in the current environment. Fortunately, Vivek was able to discuss a suitable repayment assistance package with his bank under the banking sector’s Loan Repayment Assistance (LRA).

The targeted repayment assistance initiative is a better approach to ensure that it is accessible to those who really need it, particularly those who have lost their jobs, have had pay cuts, or from lower-income families or micro-businesses.

Individuals and businesses whose livelihoods have been impacted are advised to contact their banks to discuss suitable repayment assistance packages following the re-imposition of the movement control order (MCO 3.0). The expansion of LRA to include SME businesses that are not permitted to operate during the MCO has helped many SME business owners including Vivek.

In Vivek’s case, the deferment of his monthly installments by three months will allow this 31 year-old barbershop owner to keep his store afloat and stabilise his financial situation. Now, his mind is more at ease, enabling him to focus on his side business of distributing hair care products online to take care of his family.

As for other SME business owners who are still struggling to make ends meet, Vivek advised to take up the LRA to either defer or reduce their monthly loan repayment, and also utilise many other initiatives introduced by the Government to help SMEs/Micro SMEs such as the SME Digitalisation Grant, Special Prihatin Grant (GKP), Wage Subsidy Programme and Indian Community Entrepreneur Development Scheme (SPUMI) to name a few.

InitiativeFacts
Loan Moratorium
(Individual)
Total Approved
(Completed as of October 2020)
RM65 billion
Loan Moratorium
(Business)
Total Approved
(Completed as of October 2020)
RM35 billion

In 2020, a total of RM65 billion of loans for individuals and RM35 billion for businesses benefitted from a six-month automatic blanket moratorium. Upon the 6-month completion, 85% of borrowers resumed their loan repayment. The deferred or reduced loan repayment facility has been extended under Budget 2021, which was improved under PEMERKASA+, and is targeted to benefit over 5 million borrowers.

These initiatives, aimed at relieving cashflow pressure, are part of the Government’s effort to assist the rakyat and businesses in managing their various obligations during this period, while ensuring the banking system’s ability to continue supporting economic growth.

Total Disbursed BPR ( As of 19 May 2021)

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