AS non-performing loans (NPL) rose to RM28.7 bil in the final months of last year, a Umno leader has urged the Government to act on the matter before it hits a bigger blow to the slugging economy.
“Alarmingly, overall impairments could rise to above 4% of loans by the end of this year, mainly driven by the business segment, according to Bank Negara Malaysia’s ‘Financial Stability Review – First Half 2020’ report.
“This is worrying as the impact of rising NPL rates could extend beyond the financial sector and hinder Malaysia’s economic recovery efforts.
“Hence, the Finance Ministry and Bank Negara Malaysia (BNM) should take proactive policy actions to address this issue,” Umno deputy president Datuk Seri Mohamad Hasan said, in a Facebook post.
Loan moratorium for households, businesses
On the causes, Hasan said that households were affected by job losses and salary reduction due to the COVID-19 triggered economic downturn, impairing their ability to meet loan commitments, especially for those highly-indebted individuals.
“On the other hand, the default of loan repayment among business owners is due to loss in revenue and closures, particularly in tourism-related, retail and recreational sectors,” he stated.
Offering solutions, the Rantau state assemblyperson urged financial institutions to extend and expand tailor-made payment assistance and relief measures.
He added that such measures would be in the financial institutions’ best interest to continue supporting viable businesses and households throughout the challenging period.
“Plus, reports of 2020 net profits posted by several major banks have shown that the six-month automatic moratorium has not resulted in the losses forecasted earlier by the Finance Minister.
“In other words, our banks are resilient enough, considering the capital buffers built up over the years,” the veteran banker opined. – March 2, 2021.
