KUALA LUMPUR: It is a fallacy to think that blanket loan moratorium alone can help mend the economy, Bank Negara Malaysia governor Datuk Nor Shamsiah Yunus said.
A targeted approach in loan repayment assistance was better than an automatic blanket moratorium as it put the choice in the hands of the borrowers to make financial decisions, Nor Shamsiah added.
She said a blanket moratorium would erode banks' buffers, making it more difficult for individuals and businesses to obtain new loans as banks became more risk-averse.
Besides that, Nor Shamsiah said banks' soundness and profitability matter for millions of Malaysians who are not only depositors, but also as indirect shareholders through their savings and holdings in institutions like the Employees Provident Fund, Amanah Saham Nasional Bhd, Kumpulan Wang Persaraan (Diperbadankan), Armed Forces Fund Board and Lembaga Tabung Haji.
She said so far, 1.4 million Malaysians had applied for the repayment assistance with 95 per cent approval rate.
More importantly, she said 45 per cent of borrowers receiving repayment assistance had chosen to reduce their monthly instalments rather than request for a moratorium.
"This is observed even for households and borrowers in lower income segments or the B40 group. This suggests that borrowers are making informed choices on managing their debt, based on what they can afford.
"They are not asking for moratorium and they do not want a one size fits all solution. What they want are tailored assistance that meet their financial circumstances," she said during the release of the fourth quarter and 2020 gross domestic product (GDP) data today.
Nor Shamsiah said the central bank had mobilised its resources to assist borrowers who may facing difficulties in dealing with banks through its platform for engaging with the public.
Complaints received by Bank Negara so far represents a very small numbers of borrowers of about 0.2 per cent of the total number of borrowers who have applied for repayment assistance.
While there are those who faced challenges repaying their loans, the vast majority of borrowers across different segments have already resumed loans repayments.
"Some even before the auto moratorium ended last year. This is shown by the value of loan repayments which has reached level seen before the MCO (Movement Control Order) last year.
"This is why it is a fallacy to think that the economy can only be helped by an automatic moratorium alone. As many of us has come to appreciate, a blanket automatic loan moratorium will not be in the best interest of the economy and rakyat," she said.