KUALA LUMPUR (October 17): The National Union of Bank Employees (NUBE) calls for the urgent reinstatement of the general moratorium on loans of two to three additional months across the country, at least for the bottom 40% (B40) and 40% medium (M40) income groups as well as small and medium enterprises (SMEs).

In a statement released today, its secretary-general J Solomon said thousands of low-paid workers have lost or are hanging on to their jobs, rendering them unable to repay their loans for the time being.

“The failure of [extend the moratorium] will wreak havoc and create large clusters of families mired in poverty and unable to support themselves, as well as bankrupt SMEs, all due to their inability to repay their loans due to government ignorance and of the banks of their difficulties.

“Unfortunately, these workers are not eligible for the targeted moratorium and are likely to default on their loans unless the government changes its mind and hears their cry for help,” he said.

He also said that the moratorium targeted by the banks is not enough to help many of those who are suffering.

“The Ministry of Finance (MoF) and banks must stop giving the excuse that the current targeted moratorium, which comes with a host of conditions, is adequate, saying there is no need to reinstate the general moratorium which expired at the end of September, “he said.

Solomon said based on feedback from NUBE members, many are struggling to pay off their loans despite maintaining their jobs.

“These are employees with family members who have been made redundant or whose wages have been reduced. Some of our members have also lost their part-time or weekend jobs due to the economic fallout, ”he said.

He added that as a result, many members had been forced to seek buyers for their cars or remortgage their homes to pay off their loans.

“They have no choice but to take such desperate action as they are simply not earning enough due to the economic hardship resulting from the Covid-19 pandemic,” he said.

“Their situation has been made worse by the implementation of the CMCO (Conditional Movement Control Order) in Putrajaya, Kuala Lumpur, Selangor and Sabah as well as partial closures in some areas,” he said.

Solomon also urged the government to commission a survey to gauge public sentiment on the general loan moratorium.

“NUBE is convinced that there would be broad support for an extension as the economic fallout from Covid-19 has negatively impacted the lives of all Malaysians, even more low-income groups and SMEs,” said he declared.

“The country’s gross domestic product (GDP) is expected to contract by more than 5% this year. That in itself should be reason enough for the government and the banks to do everything possible to protect the welfare of low income groups, ”he said.

He also called for the moratorium to be extended until the end of the year and subject to review in 2021 if and when the economy picks up.

“The government must not wait for the impact of CMCO to wreak havoc on the millions of people who need immediate help. The slowdown in business activity, including in malls and other virtually empty commercial premises, shows that employers and workers will be plunged into further financial turmoil in the coming months, ”he said.

He said banks would not suffer losses if the moratorium was extended because repayments would simply be delayed.

“An extension of the general three-month moratorium would not weigh on banks because it would only defer loan payments of around RM 6 billion, a fraction of the RM 32 billion after-tax profit that banks are expected to have reaped in 2019, “he said.

“The RM6 billion would not be a loss incurred by the banks, but simply a delay in collecting the amount from customers until the economy is in better shape and the general moratorium is no longer necessary,” he added.