KUALA LUMPUR (Oct 11): Deputy Finance Minister II Yamani Hafez Musa said the Credit Counselling and Debt Management Agency (AKPK) will develop a temporary assistance programme to ease the credit burden of individuals and small and medium enterprises (SMEs) which are still struggling to improve their cash flow after the expiry of repayment assistance under the National People's Well-Being and Economic Recovery Package (PEMULIH).
During the question-and-answer session on Monday, he said detailed information of the programme will be announced in the near future.
"Borrowers will also receive financial counselling from AKPK, including proper financial planning based on the borrower's needs, financial management training and referrals to other agencies through the Social Synergy Network to improve the borrower's skills and income.
"Therefore, the notion that there are those among the affected who will default in the first instance if the loan moratorium assistance is phased out or not implemented more broadly, such as the complete removal of the regular interest charge, is untrue," he said.
He said this in response to a question from Datuk Mohd Salim Mohd Sharif (Barisan Nasional-Jempol) at the Dewan Rakyat sitting on Monday on the impact of accrued interest on borrowers during the moratorium and the government's willingness to abolish the interest.
The deputy minister earlier called on financial institutions to consider abolishing accrued interest on instalment loans or profits on fixed-rate Islamic loans during the six-month repayment moratorium amid public concern.
"For the information of Yang Berhormat members, the bank is a commercial institution and loans are personal contracts entered into and must be honored between the bank and the customer. To that extent, charging interest is a commercial decision that a bank agrees with its customers when a loan application is made.
"I would also like to clarify that in implementing the current moratorium, all banking institutions have taken various measures that help to further reduce the cost of credit, especially for the most affected borrowers, and go beyond the obligations set out in the original credit agreement," he said.
First, he said, all banks had agreed not to charge compound interest on interest or penalty interest on all product loans during the moratorium. While there will be no compound interest, the deputy minister said regular interest (or accrued interest) will continue to be considered on the accrued loan balance.
This is because banks must continue to meet their obligations to pay interest to depositors, cover other funding costs, and allow banks to continue to offer credit to stimulate the economy, according to the deputy minister.
"Second, credit card holders can request to convert the balance of their credit card loan to a term loan at lower financing rates.
"Thirdly, borrowers who apply for assistance through AKPK and are among the most affected, such as borrowers who have lost their source of income or households facing the situation of the death of a breadwinner, can receive a reduction in interest costs from banks as one of the loan restructuring assistance packages," the deputy minister added.
For more Parliament stories, click here.