By Annabelle Lee
The latest change in procedure for the six-month loan moratorium for hire-purchase (HP) agreements appears to be due to an oversight by Bank Negara Malaysia.
Following its March 25 announcement on “automatic” moratoria on all loan and financing repayments, the central bank announced today that additional documentation will be required to defer HP and fixed-rate Islamic financing repayments.
In a statement late tonight, it clarified that borrowers of these two types of loans will “not need to apply” for the deferment but will need to “complete the documentation required to give legal effect on the moratorium”.
“The statement today is to address procedural issues which will give legal effect to the moratorium in accordance with the Hire-Purchase Act 1967 and Shariah requirements,” Bank Negara said.
For HP loans, this retrospective procedure addition was due to an “oversight” of the terms stipulated in the Hire-Purchase Act 1967, according to officials with knowledge of the matter who spoke to Malaysiakini on condition of anonymity as they were not authorised to issue comments.
“This was highlighted after banks promised their customers that there will be no additional charges to their HP (loan deferments),” the source said.
The law does not allow unilateral changes to HP agreements without first receiving explicit consent from the borrower.
Section 39 of the act states any alterations to a HP agreement “shall have no force or effect unless the hirer or his agent has consented to the alteration or the additional matter by signing or initialling the agreement”.
According to the section, borrowers can communicate consent by signing an additional agreement.
Up to banks to impose additional fees
BNM’s clarification tonight came after intense speculation online over its press release from earlier today that instructed banks to inform customers about any “changes to the terms of their agreements”.
“Banking institutions will also provide to each borrower/customer specific details of changes to the terms of his/her HP loan or fixed rate Islamic financing agreement.
“This should contain information on the revised payment schedule and any changes to payment amounts, including those arising from normal interest/profit rate accrued during the moratorium,” the central bank had said.
An article by personal finance website Ringgitplus also speculated that requiring borrowers to sign additional documentation opened the door for banks to charge additional interest for deferring HP and fixed-rate Islamic loans.
Previously, no additional charges were imposed on those who deferred their loans, including HP and fixed-rate Islamic financing.
BNM’s clarification tonight did not make any mention of possible additional fees for deferring these two types of repayments.
It did, however, stress that customers who have opted in for the moratorium since it began on April 1 can change their minds by informing their respective banks and resume their scheduled repayments.
Financial institutions are expected to make announcements tomorrow (May 1) about policy changes for customers who want to go ahead with the six-month loan moratorium.