FINANCIAL institutions are urged not to charge accrued interest and profits during the six-month moratorium on repayment for hire purchase loans and fixed rate Islamic financing .
Finance Minister Tengku Zafrul Tengku Abdul Aziz made the appeal today, urging the central bank to reconsider the matter.
He acknowledged the confusion and dismay the matter had raised among the people, who thought they would be charged accrued and compounded interest when the moratorium ends in October, He attributed the confusion to “inaccurate sources of information”.
“After hearing the people’s views, I wish to urge all financial institutions especially those involved in the moratorium to consider abolishing accrued interest (for hire purchase) or profits (for fixed rate Islamic financing) for the six-month moratorium.
“In the challenging economic climate where we are faced with the Covid-19 pandemic, I hope this view will be considered by BNM and financial institutions in the country,” Tengku Zafrul wrote on Facebook.
Tengku Zafrul said each bank had its policies for a repayment holiday and that not all financing instruments were employed in the same manner.
He was responding to an outcry yesterday after Bank Negara and the Association of Banks Malaysia (ABM) issued separate statements indicating accrued and compounded interest would be charged on hire purchase loans and fixed rate Islamic financing at the end of the moratorium.
Putrajaya announced the moratorium in late March to help cushion the economic impact of the Covid-19 crisis on Malaysians.
At the time, it had appeared there would be no higher instalments. to pay after the deferment period.
Confusion followed ABM’s statement, which said its customers have a choice of paying the six months’ deferred instalments together with their October 2020 instalment without additional interest charges, or extending the repayment period by six months after the original maturity date with payable interest based on the contractual rate on the outstanding amount of the deferred instalments.
BNM yesterday issued a list of frequently asked questions to explain the terms of the deferral, with an explanation that confusion had arisen due to inaccurate illustrations in an earlier set of FAQs, which has since been removed from its website.
THE MALAYSIAN INSIGHT