YOU WON’T LOSE MUCH – WHAT’S A FEW MONTHS OF INTEREST EXEMPTION TO YOU: EVEN KU LI TICKS OFF GREEDY BANKS, TELLS BANK NEGARA TO SIDE WITH BORROWERS ‘AT DIFFICULT TIMES’ LIKE THESE

PETALING JAYA: Veteran Umno leader Tengku Razaleigh Hamzah has urged Bank Negara Malaysia (BNM) to side with borrowers amid a controversy caused by a confusion on details of the six-month loan moratorium offered by commercial banks.

Speaking to FMT, Tengku Razaleigh or Ku Li, who served as the finance minister in the 1980s, said the central bank needs to be more compassionate.

“What is the income they lose from a few months of interest from these messy hire-purchase loans? As a financial coordinating body, BNM, at a time like this, should side with borrowers.”

BNM and the Association of Banks in Malaysia’s recent statements on the moratorium for hire-purchase loans have sparked controversy, with many criticising them for making an about-turn.

In BNM’s frequently asked questions (FAQ) sheet published in March, borrowers were informed that their monthly hire-purchase payments would remain unchanged during the six month moratorium on loan repayments.

However, ABM recently outlined two options for borrowers, either pay the accumulated six months’ deferred instalments with their October instalments without any additional interest, or continue repayment after October with a six-month extension of the original repayment period.

This, however, would mean the interest based on the contractual rate would be charged on the amount of deferred instalments.

ABM’s statement was later confirmed by BNM.

The central bank however said there were no changes to the six-month moratorium policy, but said banks must comply with the Hire Purchase Act 1967 to legalise the delayed payment.

It also said that the FAQ published in March, which described effects of the moratorium on the different types of loans, were only an illustration and did not represent all the banks.

Many see the statements as a “U-turn” by the government and questioned if Putrajaya was siding with banks.

Tengku Razaleigh said he sympathised with the people, adding that the banking sector had always been “profitable”.

“With the lockdown or partial lockdown, whether we want to work or not, even when people are sleeping, they (banks) continue to make profit.

“Even with the moratorium, the banking industry is making profits off other borrowers. They cannot make losses unless they are cheating or lying.”

Tengku Razaleigh said a meaningful moratorium would mean penalties and interests were waived.

“For Islamic institutions, you cannot apply interest, in fact even to consider imposing it is wrong as it goes against shariah principles.”

He hoped BNM would exempt borrowers from interests.

“In these difficult times, it is better to give borrowers an exemption. It will not lead to big losses (for banks).”

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