Malaysians To Enjoy Lower Loan Repayment Installments At Same Repayment Tenure For All Loans Pegged To The Base Lending Rate

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Malaysians To Enjoy Lower Loan Repayment Installments At Same Repayment Tenure For All Loans Pegged To The Base Lending Rate

Kuala Lumpur, February 25, 2009 – The Association of Banks in Malaysia (ABM) is pleased to announce that all commercial banks will take immediate steps to reduce the monthly loan repayment instalments for facilities with interest rates pegged to the relevant base lending rate (BLR), if they have not already done so, to help borrowers in the current challenging environment.

The move comes in the wake of the announcement by Bank Negara Malaysia yesterday that its benchmark Overnight Policy Rate (OPR) will be reduced by another 50 basis points to 2.00 percent from 2.50 percent. In tandem with the OPR reduction, banks will be looking to lowering their BLR. The new BLR will be published by the banks individually in the days ahead, like in the cases of the previous rounds of OPR cuts in November 2008 and January 2009.

The reduction in the monthly loan repayment instalments is intended to give added impetus to the lowering of the banks’ respective BLR in line with the OPR cut. With the lowering of their BLR, banks have the option of either (1) retaining the tenure of the loan and reducing the monthly loan repayment instalments, or (2) shortening the tenure of the loan whilst maintaining the amount of their customers’ monthly loan repayment instalments.

Since the first option will translate into immediate and real benefits and savings for bank customers with facilities pegged to the BLR, a decision was reached amongst the banks for an adjustment of the monthly loan repayment instalments downwards for all such facilities across the board. System changes will be necessary and banks will endeavour to implement the downward revision of the amount of monthly loan repayment instalment soonest. Depending on the customer base and type of facilities, it is anticipated that the reduction will be completed around the end of the first quarter of 2009. Banks will be officially notifying their customers on the quantum of reduction of the monthly loan repayment instalments and the effective date directly. Bank customers preferring to retain the amount of their monthly loan repayment instalments may contact their banks immediately.

Members of the public can call the banks’ respective customer service hotlines with regard to any general queries on the proposed revision and/or BLR-pegged facilities. The list of the banks’ customer service hot-lines are published at the ABM website www.abm.org.my. ABM also operates a toll-free service called ABMConnect at 1-300-88-9980 for information on banking issues in the country.

The lower monthly loan repayment instalments will allow for more disposable income to be in the hands of the public. ABM reaffirms its member banks’ commitment to continue to be reasonable as well as responsive to the public’s needs.

Updated List of Chargees for Executing Form 42B