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KUALA LUMPUR, March 1 — Umno deputy president Datuk Seri Mohamad Hasan has urged Putrajaya to take more proactive steps to address the increase in non-performing loans (NPL) before they spiral out of control.
The Rantau assemblyman, fondly known as Tok Mat, said one of the primary effects of the Covid-19 pandemic has been the increase of NPLs to RM28.7 billion by the end of last year, making it a nine-year high.
“For households, the loss of income and unemployment impaired the ability to service loan commitments especially for those highly-indebted individuals, contributing to a rise in impaired loans,” he said in a statement.
As for the industrial sectors, Tok Mat said the default in loan repayment among business borrowers has been caused by the loss in revenue and business closures, particularly in tourism-related, retail and recreational sectors.
He added the more worrying is the fact that overall impairments could rise to above four per cent of loans by the end of this year and mainly driven by the business segment, citing a recent Bank Negara Malaysia (BNM) report.
“The Finance Ministry and BNM must take proactive policy actions, beginning with expansion and extension of tailored payment assistance and relief measures targeted at vulnerable households and businesses.
“It is certainly in the collective best interest of the banking industry to continually support viable businesses and households throughout this challenging period,” Tok Mat said.
He also spoke in favour of possibly extending the six-month automatic moratorium, which ran from April to September last year.
“Already reports of 2020 net profits posted by several major banks have shown that the moratorium did not result 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,” Tok Mat said.