ABM tells SMEs to seek banks' advice before moratorium ends

  • Banking
  • Friday, 03 Jul 2020

The Association of Banks in Malaysia (ABM) has urged small and medium enterprises (SMEs) and those who are facing difficulties in repaying their loans once the moratorium ends on Sept 30, 2020 to discuss with and seek advice from their banks.

KUALA LUMPUR: The Association of Banks in Malaysia (ABM) has urged small and medium enterprises (SMEs) and those who are facing difficulties in repaying their loans once the moratorium ends on Sept 30, 2020 to discuss with and seek advice from their banks.

Its representative, Mohd Zaini Aris said the borrowers must plan a viable loan repayment strategy from now to ease their burden of obligation and to aggravate loan repayment failure.

"Borrowers must be prepared in terms of financial and mental obligation and must not wait to seek advice from their banks.

"If they are not prepared they might face difficulty in preparing the documentation (needed) to discuss with banks as it takes times, ” he said during a webinar themed "Rescheduling and Restructuring (R&R) of Loans” organised by Bank Negara Malaysia on Friday.

On R&R, Mohd Zaini, who is also Malayan Banking Bhd (Maybank) head of consumer finance, said the purpose is to help borrowers continue with their businesses.

"More often than not banks will try to help if the track record is good and the business is still running. As long as there is no legal action taken, they will try to help but subject to eligibility," he said.

Mohd Zaini brushed aside public perception that it is difficult to get new loans once one undertakes an R&R.

He said for performing loans, R&R would not affect the Central Credit Reference Information System (CCRIS) as they would be regularised and restructured.

However, for non-performing loans, he said once the loans were restructured, a six-month observation period would be applied before the CCRIS were untagged.

"Borrowers should not fear to discuss with their banks and must look into the long term. Even if R&R being rejected, we still have many ways to help our customers and will look into it on a case-by-case (basis) and not across the board.

"Come and talk to us as we could advise the best way to manage your cash flow so that you could plan the best way to move forward, ” he said.

Meanwhile, Association of Bumiputera Women in Business and Profession (Peniagawati) president Datuk Azlin Ahmad Shaharbi said many micro and SMEs were affected by the Movement Control Order (MCO) to curb the spread of COVID-19

She said the staggered opening of businesses had made it difficult for entrepreneurs to apply for R&R and state their case.

"To succeed in R&R there must be sustainability and cash flow. But logically, for entrepreneurs they cannot answer these two questions because there are still uncertainties at the moment," she said.

Azlin said Peniagawati hoped that banks would be able to make a comprehensive assessment in order to assist micro entrepreneurs and SMEs facing loan repayment problems once the moratorium period is over.

She described the MCO implementation to contain the pandemic as a wake-up call for all entrepreneurs who were not serious with business documentation and good governance.

"Many had missed the benefits such as loans and grants under PRIHATIN (Prihatin Rakyat Economic Stimulus Package) as they were not registered with the Inland Revenue Board of Malaysia and Social Security Organisation (SOCSO).

"It is good that we learned our lesson the hard way. But as we are going in the right direction towards becoming a developed nation, we cannot be having entrepreneurs who cannot even furnish banks with financial documents. We need to go on to educate them together, ” she said.

On another note, she urged banks to consider postponing legal suits for the time to help entrepreneurs who were having a hard time.

"We also hope that the COVID-19 Act could come (into force) and give a temporary relief to those affected by the pandemic and cannot fulfil their contracts. That would help a lot, ” she said.

Until June 19,2020, the value of moratorium on repayment of loans to financial institutions under the PRIHATIN package was estimated at RM47.5 billion.

Of the amount, RM16.6 billion was utilised by the business sector, while RM30.9 billion was made use of by the rakyat via financing facilities that qualified for the moratorium. - Bernama

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