Extend loan repayment periods, Cuepacs urges the govt

PETALING JAYA: The Congress of Unions of Employees in the Public and Civil Services (Cuepacs) says it hopes the Finance Ministry and Bank Negara Malaysia can consider extending loan repayment periods to help ease some difficulties faced by civil servants during the Covid-19 pandemic.

Cuepacs president Adnan Mat said loan repayment periods, including those of personal loans, had been shortened following a circular issued by Bank Negara in 2013.

"After the circular was issued, the repayment period for personal loans was shortened from 25 years to 10 years while repayments on housing loans were brought down from 45 years to 35 years," he said.

Adnan added that the shorter repayment periods meant borrowers had to pay larger sums to service their loans, leaving them with a smaller disposable income.

He said as people were facing financial difficulties because of Covid-19, it was only rational for the banks to offer an extension on loan repayment periods.

"By extending the repayment period, borrowers would pay a smaller amount to service their loans, leaving them with more resources to spend on other necessities.

"Furthermore, those who took up housing or personal loans to start a small business would not have to worry so much," he said in a statement Tuesday (Nov 24).

Adnan added that borrowers could also restructure their loans and pay an affordable amount to keep them from going bankrupt.

He said this move could revitalise the economy as people would have more spending power.

In tabling Budget 2021, the government proposed targeted loan repayment assistance for borrowers in the B40 and M40 categories to lighten their load.

Borrowers in the B40 category could either opt for a moratorium on their instalments for three months or reduce their monthly repayments by half for a period of six months.

Borrowers in the M40 category would only need to make a self-declaration of any reduction in income in order to secure repayment assistance.

The facility is expected to commence in December.