KUALA LUMPUR, July 21 — Borrowers must begin servicing their loans from October as the repayment moratorium will end as scheduled in September, Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz said today.

He told the Parliament that banks will instead take a targeted approach in helping borrowers with restructuring their existing loans.

"The moratorium is for six months, that is until September 2020. The amount that has been allocated for this is about RM100 billion. This moratorium as I said, ends in September, as with the opening of the economy on May 4, the people and businesses already started generating income, and some were able to repay their loans.

"So the next step after discussions; discussions are still underway with local banks to help in a more targeted manner,” he said in a reply to Datuk Seri Ahmad Maslan (Pontian-Umno).

Tengku Zafrul said an example is to extend the loan repayment period to reduce the amount of monthly repayments. 

Another example, he said, is to change the terms and conditions and change the interest rate, and grant other exemptions until the borrowers are financially stable.

"However, for now, we hope that the borrowers would meet the banks and get help from the Credit Counselling and Debt Management Agency and Small Loan Scheme,” he added.

Ahmad had asked Tengku Zafrul whether local banks could further extend the loan moratorium period and whether more announcements would be made to the government’s initiatives under the Penjana economic recovery stimulus.

To another question from Datuk Seri Saifuddin Nasution Ismail (PH-Kulim Bandar Bharu),  Tengku Zafrul said the call to extend the loan moratorium is still being discussed.

"On the moratorium, we are still discussing.  There is no definite decision as yet, but I will take note of your suggestion,” he told Saifuddin.

Saifuddin lamented that Tengku Zafrul's reply to Ahmad was "non-committal and open-ended”.

"I want to say that the banking sector's assets in Malaysia as of October 2018, amounts to RM2.63 trillion. If they let go RM59 billion, it's not an issue, and from RM 2.63 trillion, more than half are household debts.

"So I truly plead. The moratorium issue is one that has to do with people's livelihood. I ask for your response,” he added.

In March, Prime Minister Tan Sri Muhyiddin Yassin announced the six-month moratorium on loan repayments ending September 30, in order to relieve the burden of people who are directly affected by the impact of Covid-19 pandemic.

Loan repayments during this period need not be paid but borrowers that take up the scheme will accrue additional interest.

Groups such as the Malaysians Trades Union Congress (MTUC) have urged the government to extend the moratorium at least for Malaysians in the Bottom and Middle 40th per centile (B40, M40) to alleviate the financial pressure that was expected to rise with the economic slowdown.

The Federation of Malaysian Manufacturers (FMM) had also called for a similar extension, saying it would give businesses some breathing space to avoid possible job cuts and accelerate the country’s recovery.