Consider abolishing accrued interest, Zafrul suggest to BNM

 

KUALA LUMPUR — After a big hype and dissatisfaction shown by the majority of people and netizens over the accrued interest on hire purchase (HP) loans and fixed-rate Islamic financing, during the six-month moratorium period on loan repayments, Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz has suggested to Bank Negara Malaysia to abolish it.

Zafrul said though there are many banks that offer loan deferment without imposing the accrued or compounded interest, the flexibility does not cover all loan products.

“Each bank, meanwhile, sets its own approach on matters related to interest imposition, during the moratorium.

“There is a possibility that it can be implemented, and taking the people’s request into account, I would like to suggest that all financial institutions, especially those involved in this moratorium, to consider abolishing the accrued interest for hire purchase loans or profits for fixed-rate Islamic financing, for this six-month moratorium period,” Zafrul said on a Facebook posting.

Final say comes from Bank Negara

Zafrul suggested that Bank Negara Malaysia has the final say on this matter as it is empowered under the Central Bank of Malaysia Act 2009.

However, he has begun taking proactive steps to seek a solution to the issue, via discussions with BNM and banks, in the interests of the people.

“Given the challenging economic conditions caused by the Covid-19 outbreak, I sincerely hope that this view can be given due consideration by BNM and other financial institutions in the country. I believe this move will have a positive impact on our people,” he added.

BNM yesterday said that it regrets the “confusion and anxiety” stemming from its announcement on changes to the six-month moratorium for HP loans and fixed-rate Islamic financing, on March 30.

The Central Bank of Malaysia tried to explain that the payment deferment is still automatic for HP and fixed-rate Islamic financing, adding that what is required now is an additional step to comply with procedural requirements under the Hire-Purchase Act 1967 (HP Act) and Shariah.