BNM Announces Additional Measures To Assist Individuals And SMEs Affected By COVID-19

Bank Negara Malaysia (BNM) has recently announced that it will establish additional financing measures to provide relief and support to small and medium enterprises (SMEs), following the release of Budget 2021 by the Ministry of Finance last week.

These measures, which include additional targeted repayment assistance for individuals and SME borrowers, and several other initiatives, are part of continuous efforts by the financial industry to support economic recovery, while also safeguarding the livelihoods of Malaysians.

Let’s break down the different initiatives:

1. BNM’s fund for SMEs

a) Establishment of the RM2 billion Targeted Relief and Recovery Facility (TRRF)

The RM2 billion facility is for eligible SMEs whose revenues have been affected by the recent enhanced and conditional movement control orders.

In addition, SMEs in targeted vulnerable sectors, namely personal services, food and beverage services, human health and social work, arts, entertainment and recreation subsectors, will also be eligible for the TRRF.

Offered at a concessionary rate of up to 3.5%, the TRRF will be available through participating financial institutions, with guarantee coverage by Syarikat Jaminan Pembiayaan Perniagaan (SJPP) and Credit Guarantee Corporation (CGC).

The facility will be open for applications from 1 December 2020 onwards.

Visit BNM’s dedicated page for more information on TRRF.

b) Establishment of the RM500 million High Tech Facility (HTF)

The RM500 million facility is to support SMEs in high-tech sectors, for example fertilisers and synthetic rubber, basic chemicals, refined petroleum products, biotech pharmaceuticals, as well as air and spacecraft sub-sectors.

The HTF aims to sustain Malaysia’s competitive positioning in global value chains and safeguard high-skilled jobs, as the high-tech sector and innovation-driven firms are instrumental in realising new growth opportunities for the country.

Further details on the HTF will be announced on 1 December 2020.

c) RM110 million increase in allocation for the Micro Enterprises Facility (MEF)

This facility will be increased from RM300 million to RM410 million, with an available balance of RM200 million to support microenterprises including gig workers on digital platforms and the self-employed. The facility is for working capital and capital expenditure.

Visit BNM’s dedicated page for more information on MEF.

2. Enhancements to the Targeted Repayment Assistance (TRA)

The banking industry has agreed to provide additional targeted repayment assistance for individuals and SME borrowers.

These enhancements are an addition to what has been previously announced for those who have lost their jobs, and for individuals and SMEs whose incomes have been affected by the pandemic.

Borrowers can also continue to approach their banks for tailored repayment assistance based on their specific financial circumstances. Banks will stand ready to provide support to borrowers that need assistance.

3. Other initiatives to aid individuals and SMEs

In addition, the Malaysian government, BNM and the financial industry are collaborating on several other initiatives to further assist individuals and SMEs:

a) Expansion of iTEKAD programme

Launched in May 2020, it combines social finance instruments such as zakat, sadaqah and waqf with the provision of microfinancing, structured training and mentorship.

These instruments aim to empower micro-entrepreneurs from the B40 segment to generate sustainable income and achieve financial resilience.

In tandem with the increase in allocation to MEF, the iTEKAD programme will be expanded to include participation from Islamic banks, allowing a wider collaboration and implementation of states and partners.

b) Perlindungan Tenang Protection for B40

Other financial assistance includes the distribution of vouchers for the B40 segment to purchase insurance and takaful coverage from licensed insurers and takaful operators under the Perlindungan Tenang scheme.

The RM50 vouchers will be given to eligible BPN recipients to help them purchase the products, starting 1 April 2021.

Approved by BNM to meet the needs of underserved market segments, the Perlindungan Tenang product comes with stringent criteria on affordability and customer value, with minimal exclusions to ease claims and ensure meaningful protections, particularly for lower-income groups. The product also includes protection for life takaful and personal accidents.

For more information on Perlindungan Tenang, and to obtain a list of participating providers, you can refer to their dedicated page.

Additional assistance for B40 and microenterprise borrowers

Additional repayment assistance will be rolled out to borrowers in the following categories:

• B40 individuals who are recipients of Bantuan Sara Hidup (BSH)/Bantuan Prihatin Rakyat (BPR)
• Microenterprises, as defined by SME Corp, for facilities with approved amounts of up to RM150,000.

Borrowers in these categories can request to either:

• Defer monthly instalments for three months
• Reduce monthly instalments by 50% for six months.

The assistance will be extended for facilities approved before 1 October 2020 - which are not in arrears for more than 90 days at the time a borrower requests for repayment assistance.

B40 and microenterprise borrowers who had previously received other forms of targeted repayment assistance and who wish to request for further assistance under the additional measures recently announced can still do so by contacting their banks.

To request for this assistance, eligible borrowers will only need to confirm their repayment option with their bank, no other additional documentation is needed from borrowers.

However, for hire purchase loans and fixed rate Islamic financing, borrowers would need to sign new agreements in accordance with the Hire Purchase Act 1967 and Shariah requirements.

These additional repayment assistance will be available to eligible borrowers between 23 November 2020 and 30 June 2021.

Borrowers may indicate the repayment assistance from 23 November 2020 through the respective banks’ customer service hotlines, online banking, or by visiting bank branches. The banking industry will provide further details on these enhancements next week.

The repayment enhancement will be available for instalments due in December 2020 onwards, and will take effect at the next instalment following a borrower’s request and confirmation.

BNM has also been working with the banking industry to fine tune the delivery of targeted repayment assistance:

1. Simpler documentation for borrowers who are BPN M40 recipients

Banks will accept requests for a reduction in monthly instalments from M40 borrowers who are registered in the Bantuan Prihatin Nasional database, and whose household incomes have been reduced due to the pandemic.

But it will be based on borrowers’ self-declaration of reduced income and/or their household to further expedite immediate relief. Before taking further steps, banks will continue to engage with such borrowers subsequently to review their financial circumstances.

2. Dedicated Agensi Kaunseling dan Pengurusan Kredit (AKPK) Micro Enterprise Help Desk

In addition to contacting banks, an additional avenue will be made available for microenterprises to request for repayment assistance.

Businesses are encouraged to take advantage of AKPK’s dedicated micro business helpdesk starting 9 November 2020. The virtual help desk provides free financial advice and facilitates applications for repayment assistance.

3. Assessment of a borrower’s overall household income

Requests from individual borrowers to reduce their instalments will not only take into account the borrower’s own income, but also how the income of his or her spouse has been affected by the pandemic.

This practice has already been implemented by most banks, and is now adopted by all banks to create a more holistic assessment of a borrower’s financial situation.

These new enhancements build on existing efforts adopted by banks to better accommodate the challenges faced by borrowers.

BNM also said it would like to reassure borrowers facing financial difficulties due to the pandemic that repayment assistance remains available to individuals across all income groups and SMEs of all sizes that need assistance.

Instead of a blanket moratorium, a tailored-approach, with special consideration given to each borrower’s specific circumstances will be more helpful to support their current and future needs, BNM implied.

Despite the ongoing measures to contain the COVID-19 virus, the resumption of economic activities - despite the recent heightened measurements - has enabled many borrowers to resume paying down their debt. To date, around 85% of borrowers have started making their monthly instalments.

For borrowers who can afford to make their payments, BNM states that it’s in their best interest to start doing so as reduced or deferred instalments will lead to higher overall debt, due to the continued accrual of interest which borrowers eventually have to bear in the future.

At the same time, borrowers who still face financial challenges will continue to be supported through targeted repayment assistance which allows them to make informed decisions based on their own financial management needs and goals.

Targeted repayment assistance will continue to be available for affected borrowers throughout 2020 and 2021.

Where can borrowers go for more assistance?

BNM urges borrowers who face difficulties meeting their loan repayments to contact their banks, AKPK or BNMTELELINK to understand the options available to help them manage their debt.

Borrowers facing difficulties with their banks can lodge a complaint with BNMTELELINK at their dedicated page or visit BNM’s targeted repayment assistance page to obtain more information.