J Solomon, MTUC secretary-general.

KUALA LUMPUR: The Malaysian Trades Union Congress (MTUC) has urged the Finance Ministry and Bank Negara Malaysia (BNM) to pull its weight in ensuring banks extend the moratorium by at least another six months, especially for the targeted group of workers who are still unable to service the loans.

In a statement, MTUC secretary-general J. Solomon said this would include many of the 800,000 workers who lost their jobs until April this year and thousands more who were forced to take deep pay cuts or go on unpaid leave by their employers.

He said for banks to adopt a ‘business as usual’ attitude and expect workers, who are still mired in job losses and with little or no income to resume paying their loans, is a downright cruel and inhumane act against the borrowers.

“The official statistics clearly show that many workers have been rendered unemployed due to the economic downturn caused by the Covid-19 pandemic and the opening of the economy is an ongoing, albeit, slow process and it will take time for workers to get back on their feet and service their loans.

“There should not be any doubt on the part of the government, especially the Finance Ministry and BNM, that a large slice of the workforce is far from ready to resume servicing their car and housing loans. If the banks persist in ‘collecting’, then we can expect to see record forfeitures of vehicles and homes of the working class which will inflict untold misery on them and their families,” he said.

Solomon said the ministry and BNM must not abdicate their responsibility to ensure that the moratorium is extended for another six months to all Bottom 40 and Middle 40 groups, as well as all workers who have lost their jobs irrespective of their salary scale.

The same extension should also be given to companies with loan facilities which are struggling to keep afloat during this pandemic period, he added.

He said there is no question of banks incurring losses because of the moratorium, however, the loans are not written off but the instalment payments are merely deferred until the economy normalises.

“If at all, only a reduction in profits is possible due to loss of reinvestment interest and liquidity cost. Loss of reinvestment interest, in any event, is inevitable given the draw back due to the pandemic.

In 2019, all the banks in Malaysia recorded multi-billion ringgit in profits, as had been the case for so many years. In facing Covid-19, both the Finance Minister and BNM have repeatedly said the banking sector remained strong with more than adequate financial liquidity.

Solomon said BNM figures showed that the banking system’s excess capital and liquidity stands at RM159 billion and RM199.6 billion, respectively, above the regulatory minimum levels.

According to BNM, this has enabled banks in Malaysia to play a leading role in assisting households and businesses to recover from the Covid-19 pandemic shocks.

“These point to a strong and vibrant banking sector that is easily able to grant a further six-month extension to needy Malaysians,” he said.

Yesterday, BNM said it was unlikely that financial institutions would extend the six-month moratorium on payment of monthly instalments for vehicles and housing loans which will end on September 30. – Bernama