FINANCIAL INSTITUTIONS HAVE DELAYED MORATORIUM CONFIRMATION IN 2020 / 2021. SO WHY CAN’T WE GET BUSINESS LOANS NOW?

Over the past few months, this has been one of the most popular questions asked among the many queries that we had received.

The issue was that, customers after the BNM Implemented 6-month Moratorium, have applied for the 2nd Moratorium which was upon confirmation from their respective Financial Institutions.

However, some Financial Institutions took over 2 months to revert back in the meantime, these customers did not service their bank loans, expecting their moratorium applications to be approved.

Sadly, when these extensions were not approved, and outstanding loans became overdue showing up on their CCRIS reports, thus negating their opportunity to qualify for new loans.

THE UNDERLYING PROBLEM TO THE ABOVE

Are you and your Business affected by the same problem?

It is not my place, to comment on Government nor Banking procedures.

However, I am going to try my best to explain this dilemma from both the customers and the Financial Institutions’ points of view.

During the first Moratorium period of 6 months, Financial Institutions were forced to extend the said moratorium to customers as it was a Bank Negara Requirement. However, during the second Moratorium exercise, it was No Longer a requirement. However, a request could be made to the Financial Institution and it was up to their discretion whether to allow the said extension or not.

As expected, the Financial Institutions had an overwhelming amount of request and it took a long time for them to come back to the clients. However, they noticed that, during that period, there were some customers who attempted to make some payments towards their loans. This made them see that the customers intended to pay but were actually affected by the Covid-19 in some way and could not handle the payments.

However there was another sect of customers who did not pay anything at all towards their loans and awaited the Financial Institutions’ answer to extend their Moratorium. Some of these customers already had an outstanding before the Moratorium period which means that they had outstandings before March 2020.

These accounts of outstanding then snowballed from March 2020?to Beginning 2021 showing that their current outstandings are currently 3 months or more, which made them a High Credit Risk.

My Point being, is that if Financial Institutions were unable to extend the said Moratorium period, then they should have informed the client right away as they already had their credit records to refer to, by delaying the confirmation, they have indirectly created the above mentioned High Credit Risk situation.

WHY CAN’T THESE INDIVIDUALS AND BUSINESS GET LOANS NOW IN 2021 / 2022?

This is the crux of many of the infuriated customers who have written and spoken to us. Their argument is that the Government declared that Financial Institutions should help Businesses recover after Covid. But the Financial Institutions ?are Not Helping all.

Without, being biased, I am merely attempting to give the reasons as to why so many loans were rejected during 2021. In No means am I on the side the Financial Institutions. I am again merely stating their current stand on the matter:

1)?????DISTRESSED CUSTOMER – The Financial Institution looks at any customer who has applied for the 2nd and 3rd Moratorium in 2021 as a Distressed Customer, as if you are enjoying the benefits of a Moratorium, then you are in No Position to service your current debts.

Thus any loan application from such an individual or company is promptly rejected, because they are not even in a position to service their current borrowings.

2)?????PURPOSE OF NEW LOANS – This is another question that Financial Institutions have, if the Customer has applied for Moratorium extensions, then for what purpose do they need additional loans? How can they build their revenues strong enough to not only handle their current financial obligations, but handle the repayment of the new loan liability?

?3)?????3RD PARTY FINANCING ENTITIES ON MORATORIUM – This is something that we just discovered in mid 2021, with some of our clients. It has come to out attention that some Finance and Credit Companies have not given even the initial 6 Month Moratorium to their clients way back in April 2020.

This has caused a lot of these customers to have a huge outstanding of over 6 months in arrears, without them knowing about it as they were under the assumption that the said Moratorium was supposed to be implemented for all financial services.

This has been reflected in their CCRIS and CTOS reports. Since Financial Institutions use these systems to determine the Credit Scores for customers, they most definitely did NOT QUALIFY for loans by virtue of this outstandings.

?The Above is some of the reasons as to why Customers are not getting loans after the Moratorium Period.

THE PROPOSED SOLUTION – Contact your Financial Institutions and see if they can restructure your current borrowings, again with a restructuring it is completely up to the applying Financial Institution to see if the reasons are acceptable or please do update your current loans that are reflected in your CCRIS and CTOS. At this juncture, till these are updated all Financial Institutions that any applications made by these companies and individuals will be rejected, as they fall under the category of a High Credit Risk.

IS THIS FAIR?

I suppose NOT! Every individual has gone through some loss in these last 2 years, but this is an unprecedented time for all of us, inclusive of the Financial Institutions.

I believe that we need a synergy here. We cannot work, without the support of the Financial Institutions. ?On the other hand if the Financial Institutions are not willing to aid businesses in this crucial times, then the problem is just going to get bigger and more complicated this year.

Therefore, a Win-Win situation must be realized by both parties in order for us to make 2022 work and come out of this Pandemic.

Please feel free to give us a call should you have any further queries … Always remember….“THE SURVIVAL OF YOUR COMPANY, IS THE SURVIVAL OF OUR ECONOMY.”

Please feel free to Email me personally during this troubled times at: [email protected]

Visit us at : www.skbassociate.com?Or ?Whats App your BUSINESS QUERIES to: ?

Tel ???: 016 – 946 0208

Till then please Stay Safe!!!

S. KHUGAN

GROUP MANAGING DIRECTOR