Banks agree to waive compounded interest and penalty charges for moratoriums

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The Finance Minister said borrowers need to approach their banks on the method of repayment and every bank will have a different loan scheme for their borrowers.

Banks will waive the compounded interest and penalty charges incurred during the six-month loan moratorium under the National People’s Well-Being and Economic Recovery Package (Pemulih), said Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz.

He said the government had raised the matter with the banks during their meeting recently and they had agreed to it.

“Report and complain if the banks raise a compound (interest) and charge a penalty (on the moratorium),” he said told a press conference today.

Yesterday, Prime Minister Tan Sri Muhyiddin announced a six-month moratorium on loan repayments for individual borrowers across all income brackets.

Tengku Zafrul advised borrowers to approach their banks regarding the method of repayment if they wished to apply for the moratorium.

Zafrul said every bank will have a different loan scheme for their borrowers after several quarters asked if borrowers would be subject to paying interest for deferring their repayments.

According to the minister, it was up to the borrower and their respective banks to discuss the additional terms.

“I don’t know the answer (to the interest-free), the interest charges will differ from bank to bank, from product to product, but what I can assure you is that the banks shouldn’t take advantage of the current situation.

“Having said that, we really need to start focusing on opening up the economy when the time is right so people can start earning an income,” he said.

Muhyiddin also said yesterday that there will be no more conditions required for moratorium approval.

There will also not be documentation required or checks on whether the applicants have lost their jobs or faced with income reduction.

“You just have to apply and an automatic approval will be given,” Muhyiddin said.

Yesterday, two former finance ministers, Lim Guan Eng and Datuk Seri Najib Razak, had asked Putrajaya to clarify if the loan moratorium would be interest-free.

They said, while the latest aid package was awaited by many, there are still some shortcomings that need to be looked into and explained about the loan moratorium, saying it is not an automatic moratorium and at the same time it is interest-bearing.