Several banks won't compound interest during loan moratorium

• UPDATED March 28 | Added UOB to the list.
• UPDATED March 27 | Added Alliance Bank and Affin Bank to the list.
  

CORONAVIRUS | On Tuesday, Bank Negara instructed banks to grant an automatic six-month moratorium on all loan and financing payments, except for credit card balances.

The order stated that the moratorium is to begin on April 1 and is aimed at easing the cash flow of small-medium enterprises (SMEs) and individuals as the nation grapples with the health and economic ramifications of the global Covid-19 outbreak.

To be applicable, it said borrowers must not be in arrears exceeding 90 days as of April 1 and the loans are denominated in ringgit.

Since then, banks across the country have announced their policies in compliance with the order by Bank Negara.

Some have even gone above and beyond Bank Negara's instructions to help its customers, such as by not compounding interest on loans for the duration of the moratorium.

Malaysiakini has compiled various banks’ policies:

Ambank

AmBank and AmBank Islamic will be offering automatic payment deferment for loans and financing for all individuals and SME customers.

Customers who wish to opt-out may just continue their regular monthly installment payments. There will be no compounding the interest or profit on loans and financing during this six-month period.

Customers with credit card facilities may convert their outstanding balances into a term loan/financing for a tenure of 36 months at 13 percent per annum, also effective April 1.

Public Bank

Aside from the six-month moratorium on loan payments to all eligible business customers, it announced there will be no compounded interest from April 1 to Sept 30, 2020.

It said for Islamic financing, the profit rates would not be compounded in line with syariah principles.

Maybank

Maybank will not compound interest for all individual, SME and non-retail or corporate customers’ loan facilities during the six-month moratorium.

The eligible products under the automatic deferment scheme for retail and SMEs include personal, mortgage, Amanah Saham Bumiputera (ASB), education and SME loans.

However, eligible non-retail/corporate customers must first submit an application for a deferment through their relationship managers or corporate bankers for approval for the non-compounding of interest to apply.

Its fixed-rate hire purchase loans already do not have compounding interest.

For Islamic financing facilities, profit rates are already not compounded in line with syariah principles.

CIMB

CIMB Bank and CIMB Islamic Bank Berhad announced the moratorium would be applicable to all ringgit-denominated loans and financings held by eligible customers.

For individual customers, eligible Islamic and conventional products include ASB financing, home financing, auto financing and personal financing (express cash, cash plus loan and Awam-i).

For SME customers, it said the moratorium applies to all existing term loans and financings and industrial hire purchase.

Interest and profit will continue to accrue on deferred loan and financing repayments that are deferred.

Interests on conventional loans will not be compounded during the moratorium period, while profit rate for Islamic financing will not be compounded in line with syariah principles.

Individual customers who choose to opt-out of the moratorium are asked to send an SMS to the bank. The SMS Opt Out details will be made available on CIMB’s website on March 31.

SME customers who wish to opt-out are advised to visit CIMB’s website to fill in the Let-Us-Call You e-form, or they may contact their relationship manager.

Credit card customers may opt in to convert their card balances to a term loan or financing at 13 percent per annum and up to a tenure of three years.

RHB

RHB will not compound interest during the six-month loan repayment moratorium for the bank’s retail as well as SME customers effective April 1.

For Islamic financing, RHB will continue to observe the principle of no compounding profit.

OCBC

OCBC Bank and OCBC Al-Amin Bank will not compound interest during the six-month loan repayment moratorium for the bank’s retail as well as SME customers effective April 1.

Alliance Bank

Alliance Bank will not compound interest on conventional loans for the duration of the moratorium.

In accordance with Syariah principles, the profit for Islamic financing is not compounded.

However, the interest/profit on the deferred loan/financing repayments will continue to accrue.

Credit card users may convert their outstanding balances into a three-year term loan tenure at an effective interest rate of 13.0 percent per annum.

Individual and SME clients who wish to opt-out of the automatic six-month moratorium may do so by responding to an SMS message by March 30.

Affin Bank

Affin Bank Bhd and Affin Islamic Bank Bhd are offering their retail customers and small and medium enterprises (SMEs) clients non-compounding interests or profit for six months for term loan and term financing.

UOB Bank

United Overseas Bank (Malaysia) Bhd (UOB Malaysia) has also announced that it will not compound interest on loans and mortgages for all eligible individual and small-and-medium-sized enterprise (SME) customers during the six-month moratorium period.

For its Islamic banking customers, the bank has said it would continue to observe the shariah principle of not compounding profit on Islamic financing facilities.

“All individual and SME customers do not need to apply as they automatically qualify under Bank Negara Malaysia’s relief measures.

“Their loans and mortgages will not be charged compounded interest during the moratorium period,” the bank said in a statement today,

The bank also said that interest or profit accrued during this period will not be charged interest and the bank will not impose late penalty charges on the deferred amount.

These measures will take effect on April 1, 2020.

However, individuals and SME customers who choose to opt-out from this automatic moratorium will need to inform the bank.

Corporate customers, meanwhile, can choose to opt-in by submitting their request for a moratorium through their UOB relationship managers and will be considered on a case-by-case basis.

UOB Malaysia will also absorb the fees charged to customers when they use another bank’s ATM to withdraw cash from their UOB bank account.

List compiled from Bernama.