MoF orders banks to work on exemption of interest payments for recipients of loan moratorium

Banking institutes have been instructed by the Ministry of Finance (MoF) to come up with an interest exemption for recipients of the bank loan moratorium immediately.

The exemption will apply to recipients of the moratorium from B50 segment, the bottom 50 percent of all Malaysians in terms of income classification, for a period of three months in the fourth quarter of 2021 (October to December 2021).

Previously, when the government instructed banks to extend the loan moratorium for another 6 months, the extension had not been interest-free. Instead, banks were only ordered to waive compounded interest and penalty charges on recipients of the moratorium.

The latest development will mean that not only will recipients not be penalised for opting for a moratorium but will be able to pay off their existing loans without the extra interest fee that was previously levied.

Also read: 6-month moratorium extension and RM 6b fuel subsidy announced in Pemulih aid package

According to The Edge, the new development was decided following a Cabinet meeting on 10-September-2021.

Finance Minister, Tengku Datuk Seri Zafrul Tengku Abdul Aziz, announced that the government has approved a proposal to table amendments to the Temporary Measures for Government Financing (Covid-19).

This will see the ceiling limit of the Covid-19 Fund raise to RM 110 billion from the original RM 65 billion. The statutory limit of the federal government debt will also be raised from 60 percent to 65 percent of gross domestic product (GDP).

Tengku Zafrul hopes that this will help improve direct cash assistance to Malaysians and help support the business continuity especially to small and medium enterprises (SME) as well as micro-SMEs.