Islamic Finance

Malaysian banks to defer financing repayments of individuals, SMEs, for six months to ease COVID-19 pressure

Malaysian banks will from April 1 offer a six-month deferment of all loans and financing repayments for individuals and SMEs, the central bank said in a statement on Wednesday (Mar 25).

The move to help ease cashflow amid the continued COVID-19 spread is for all performing loans and financing denominated in ringgit that have not been in arrears for more than 90 days as at April 1.

Bank Negara Malaysia said banks will offer to convert outstanding credit card balances into three-year term loans at reduced rates to help borrowers better manage debt.

Corporations can request for their loans or financing to be deferred or restructured, said the central bank.

“The (central) Bank has provided appropriate time-bound flexibilities for banking institutions to report deferred/restructured facilities in the Central Credit Reference Information System (CCRIS), taking into account the temporary nature of disruptions faced by borrowers/customers,” said BNM.

The central bank recently reduced the Statutory Reserve Requirement (SRR) ratio by 100 basis points and gave additional SRR flexibilities to Principal Dealers. These moves have released approximately 30 billion ringgit worth of liquidity into the banking system, according to BNM.

The regulator is also now allowing banks to draw down on their capital and liquidity buffers to supporting lending activities. It expects banks to restore the capital conservation buffer of 2.5%  “within a reasonable period after 31 December 2020”.

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