The outbreak of the Covid-19 has significantly affected the people, not only about health and also on financial matters. As a relief to help ease the burden of the people who are in financial difficulties, our Prime Minister Tan Sri Muhyiddin Yassin has on 25th March 2020, announced a six months loan deferment package following the outbreak of Covid-19.
What is this loan deferment package?
The loan deferment is an automatic postponement of loan repayments announced by the government for six months starting from 1st April 2020. All licensed banks and financial institutions regulated by the Bank Negara Malaysia will provide this deferment flexibility. In other words, the eligible borrowers do not have to serve the loan installments for the next six months, which is 1st April 2020 to 30th September 2020, and there shall be no action taken against you. Further, there shall be no negative implication to one’s Central Credit Reference Information System (CCRIS) record caused by this loan deferment during the period allowed by the government.
Are all loans qualify for the deferment?
For individuals and small and medium enterprises (SMEs), all loans except for credit card balances are automatically effected by financial institutions for the deferment, provided that the loans fulfill the criteria below:-
i) not in arrears exceeding 90 days as at 1st April 2020; and
ii) denominated in Malaysian Ringgit.
Although this loan deferment does not apply automatically to the corporate sector, such borrowers may negotiate with the respective financial institutions on a restructuring of loan repayments that suit their current business situations.
Is there any interest charged to the loan during this loan deferment period?
Although the borrowers are not required to pay for loan repayment, for the time being, loan interest will still be calculated and charged to the outstanding loan during this deferment period. Hence, one may face either an extension of the loan tenure or higher subsequent installment amount once the deferment period ends. The accrued interest will not be compounded to the loan only during this deferment period.
As such, one must lookout for any notice from their respective financial institution. One may also negotiate with the banks on the repayment method after the deferment period; i.e., an extension of the loan tenure.