KUALA LUMPUR, June 4 – Umno Youth today urged the Government to make full use of provision under the Emergency (Essential Powers) Ordinance 2021 to immediately ensure that the banking and financial institutions offer a 3-month automatic moratorium 2.0 without additional charges or interest.

Its head Datuk Dr Asyraf Wajdi Dusuki said the move should be offered to the B40 group in easing their burden during this lockdown. He also listed seven rationales and justifications for the moratorium.

The first is to  ensure that the people’s cash capacity is not affected due to the implementation of ‘total lockdown’ since they have to fork out for other basic bills, i.e electricity, water and Internet.

“Secondly, they are facing cash problems on average due to savings which have declined sharply compared to PKP 1.0.

” Both the  deferment of bank installments can also prevent the occurrence of bankruptcy due to the severe fall in income of SMEs, the self-employed and households with no fixed income, including M40 due to the prolonged Covid-19 pandemic,” he said in a Facebook posting.

Thirdly, Asyraf said the phenomenon of bankruptcy among the people due to affected income and inability to service their loans will have negative bearing to the national economy and directly affect the operation and stability of the institution.

Fourth,  offering a moratorium will guarantee the stability of the financial system as well as prevent banks from facing the phenomenon of non-performing loans.

“Fifth, the capability of banking institutions to absorb any potential market shock are still strong and at international standards set by the IMF and Bank Negara Malaysia.

“Local banking institutions have a healthy level of capital and are able to support the country’s economic credit flow based on the Total Capital Ratio at 18.1% above the requirements of Bank Negara Malaysia (BNM), which is a minimum of 8% with Capital Excess Buffer at RM126.3 billion in February 2021.

“The sixth, level of liquidity of local banks is also at a healthy state based on BNM’s Liquidity Coverage Ratio report for the national banking system which is at 145.1% and exceeds the minimum requirement of 100% despite implementing moratorium 1.0 during PKP 1.0.

“Although there is an increase in the Provision for Credit Losses of national banking system month to month per se, it is still only 1.8% of the total financing (loans) of the system amounting to almost RM1.85 trillion,” he said.

He added that the implementation of the previous Moratorium 1.0 also did not affect the ability of banking institutions to generate profits and even most banks announced comfortable profits for the First Quarter of 2021 such as Maybank (RM2.39 billion), Public Bank (RM1.53 billion), Hong Leong (RM2.17 billion) RHB Bank (RM650.39 million), Bank Islam (RM202.46 million) and Affin Bank (RM68.94 million).

And seventh, the government-owned financing and credit agencies for the B40 group and Micro Enterprises such as Mara, Tekun, Amanah Ikhtiar Malaysia, SME Bank and others to implement a moratorium for their participants.