Majority Of Banks Have Re-Adjusted Base Lending Rate (BLR) Pegged Loans To Realize Immediate Benefits For Customers

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Majority Of Banks Have Re-Adjusted Base Lending Rate (BLR) Pegged Loans To Realize Immediate Benefits For Customers

Kuala Lumpur, April 10, 2009 - The majority of member banks of The Association of Banks in Malaysia (ABM) has taken immediate steps to reduce the monthly loan repayment instalments for facilities with interest rates pegged to the relevant base lending rate (BLR).

It is also important to stress that these banks have fully cascaded the directives to all their branches nationwide.

We would like to respond to the report in a local daily, dated April 9th which stated that many banks have yet to reduce the monthly loan repayment instalments for loan facilities pegged to BLR.
It is not true that banks are in the dark about this very important initiative to help reduce the financial burden on customers. Only five out of the twenty two member banks have yet to implement the ruling fully but are due to do so soon.

Member banks have taken the necessary steps to ensure immediate benefits related to BLR-fixed loans are passed on to customers. The few banks that have not yet completed the entire process have adopted a phased approach in respect to the different banking products or are in the midst of making the necessary systems changes.

The timing for the implementation of the reduction of BLR pegged loan instalments could also be dependent on whether there are existing standing instructions by the customers. Customers with no standing instructions as to the amount of monthly repayments to be made, automatically benefit from the new directive unless they have specifically instructed the banks otherwise. Customers with standing instructions would however need to execute new standing instructions before the reduced instalments can be effected.

As previously elaborated in our press release dated February 25th 2009, customers could either opt to retain the amount of monthly loan repayment instalment or to shorten the payment tenure given the reduction in BLR. The reduction in monthly loan repayment instalments in some other cases has to be implemented in stages as some banking systems are pre-set to maintain monthly repayment instalments and reduce payment tenure when BLR is lowered. When a reduction in monthly repayment is preferred, manual changes in the system need to be executed. In such instances therefore, there may be a lag time before full implementation.

Furthermore, member banks have communicated with their respective customers on the approach that will be taken for the implementation of the initiative. Members of the public can call the banks’ respective customer service hotlines in regard to any queries on the proposed revision as well as issues pertaining to BLR-pegged facilities. The list of the banks’ customer service hot-lines are published at the ABM website www.abm.org.my, and is provided below as well. ABM also operates a toll-free service called ABMConnect at 1-300-88-9980 for information on banking issues in the country.

The initiative by the commercial banks to reduce the monthly loan repayment instalments for facilities with interest rates pegged to the relevant BLR ought to be distinguished from the other initiative under the Mini Budget announced by then Deputy Prime Minister, Datuk Seri Najib Tun Razak on March 10th 2009, which proposed a one-year moratorium on housing loans for retrenched workers. Commercial banks and the relevant authorities are working on a set of guidelines for the consistent and effective implementation of the proposed moratorium.

It is in the interest of our member banks to initiate speedy implementation of all initiatives to lessen the burden of borrowers in the current environment as customer relationships are vital to preserve long-term growth in banking under this challenging circumstances. Banks are cognizant of their role in several new initiatives announced by the government in the recent Mini-Budget to help boost access and convenience to financing. The sector is working hard with the relevant authorities to ensure a seamless and quick roll-out.

Commercial banks will continue to strive to be proactive and sensitive to all stakeholder needs.

Updated List of Chargees for Executing Form 42B