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Blanket moratorium not the best option for MCO 3.0

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Blanket moratorium not the best option for MCO 3.0.

This was the message from Bank Negara Governor Datuk Nor Shamsiah Mohd Yunus said when asked if banks should give a blanket moratorium with the MCO 3.0. She said that all banks already have their payment assistance plans including targeted loan moratoriums which can be offered to borrowers who have lost their jobs or suffered a reduction in income. She said, “Borrowers can also approach multiple channels that have been set up, including BNM’s Credit Counselling and Debt Management Agency (AKPK), if they require advice or further assistance.”

She added, “More importantly, borrowers are getting help that reflect their specific financial circumstances so that they will not incur more cost or debt than necessary and can get back on their feet faster. So loan moratoriums, in this respect, may not be the best solution for all borrowers.” Do read the full article in the malaymail.com here.

Should all tenants be granted rental discount automatically?

I am firm in believing that if a tenant is in financial distress, the home owner will try to help the tenant. A discount of 50% is not out of this world and it’s actually going to be a win-win situation. Tenant gets a relief and homeowner continues to have some rental and builds up goodwill. HOWEVER, if the tenant is still receiving his FULL PAY and just simply bluff the owner, then this is grossly unfair to the homeowner. This is why I do not believe in blanket approval for all and not just for the ones who really needed it.

Banks also have their shareholders too. What about them?

Banks have to run their business profitably and they have to pay their people accordingly too. Let’s not forget they also have their shareholders too. Offering a blanket moratorium is not the best option. By the way, if the borrower really do need assistance, the banks would prefer to assist. Imagine if the bank refused and proceed to take back the home or the car, they will suffer losses because the property they take back may NOT fetch a good price currently.

Just look at the auction market for some clues. Many properties go through many rounds before they are sold and it’s a 10% reduction in the selling price for every round! Let’s not even talk about cars yeah. It’s a definite loss as soon as the cars are repossessed and put into auction. The auction price is unlikely to cover the remaining loan amount. As for CREDIT CARD debts, let’s be savvy that many of these credit card issues may not have been caused by COVID-19 alone.

For this particular case, I agree with BNM Governor. Any financial assistance in the form of extension of moratorium should be based on needs basis and should not be a blanket one. I have received message from all my banks to contact them if I needed assistance for moratorium extension. It’s a choice actually. As for what could be done right now, the best is to ensure vaccinations move faster as soon as we have all the vaccination doses arriving in the country or produced.

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