KUALA LUMPUR: Bank Negara Malaysia (BNM) yesterday announced a number of regulatory measures to assist individuals, small- and medium-sized enterprises (SMEs) and corporations to manage the impact of the Covid-19 outbreak.
The central bank said financial institutions in Malaysia were well-positioned to do so, given the large financial buffers that had been built over the years.
By providing flexibilities to ease the cash flow of individuals and SMEs, banking institutions remain focused on supporting the economy and the needs of their customers.
For individuals, banks will offer a deferment of all loan/financing repayments for a period of six months, effective April 1, applicable to performing loans that have not been in arrears for more than 90 days from next month.
For credit card facilities, banks will offer to convert the outstanding balances into a three-year term loan with reduced interest rates to help borrowers better manage their debt.
As for loans/financing to corporations, the central bank said banks would facilitate requests to defer or restructure their loans/financing repayments in a way that would enable viable corporations to preserve jobs and swiftly resume economic activities when conditions improved.
As for acquiring financial assets or market transactions, BNM noted that it has ample liquidity to support these activities.
BNM will also continue to supply daily ringgit liquidity to banks via various tools under the open market operations, including the outright purchase
of government securities, foreign exchange swaps, reverse repos (a short-term agreement to purchase securities in order to sell them back at a slightly higher price) and the standing facility.
BNM has also taken pre-emptive measures to boost liquidity through the recent reduction of the Statutory Reserve Requirement (SRR) ratio by 100 basis points.
Coupled with the additional SRR flexibilities granted to dealer banks, this has released approximately RM30 billion worth of liquidity into the banking system, BNM said in a statement yesterday.
In addition, the amount of excess liquidity in the system amounted to RM160 billion. Of this, approximately RM100 billion placements with BNM under open market operations can also be used to meet the liquidity needs of the banking system.
BNM reiterated that it will continue to monitor developments and ensure sufficient liquidity in the financial system.
“With these flexibilities and sustained resilience of the banking system, which is underpinned by sound prudential and risk management practices, Malaysian banking institutions are well-placed to respond to the needs of the economy during this period of challenges.
“The flexibilities form part of the new measures that will be put in place under the Second Economic Stimulus Package 2020 to alleviate the challenges faced by individuals and businesses affected by the Covid-19 outbreak, preserve jobs and ensure continuity of viable businesses.”