In a statement, it said the measures allow banking institutions to remain focused on supporting the economy during these exceptional and unprecedented circumstances by providing flexibility for banking institutions to respond swiftly to the needs of their customers.
The measures include:
Deferment and restructuring of loans/financing facilities
1. Loans/financing to individuals and SMEs
To ease the cash flow of individuals and SMEs that are likely to be the most affected by Covid-19, banking institutions will offer a deferment of all loan/financing repayments for a period of six months, effective April 1, 2020.
This offer is applicable to performing loans, denominated in ringgit, that have not been in arrears for more than 90 days as of April 1. For credit card facilities, banking institutions will offer to convert outstanding balances into a three-year term loan with reduced interest rates to help borrowers better manage their debt.
The interest/profit will continue to accrue on loan/financing repayments that are deferred, and borrowers will need to honour the deferred repayments in the future.
Borrowers should, therefore, ensure that they understand and discuss with their banking institutions the options available to resume their scheduled repayments after the deferment period.
Individuals and SMEs that do not wish or need to avail of these flexibilities can continue with their current repayment structures.
2. Loans/financing to corporations
Banking institutions will also facilitate requests by corporations to defer or restructure their loans/financing repayments in a way that will enable viable corporations to preserve jobs and swiftly resume economic activities when conditions improve. Corporations should approach their banking institutions to discuss their repayment plans and the restructuring of credit facilities.
The bank has provided appropriate time-bound flexibilities for banking institutions to report deferred/restructured facilities in the Central Credit Reference Information System, taking into account the temporary nature of disruptions faced by borrowers/customers.
Ample liquidity conditions
Financial intermediation activities during this period is supported by sufficient liquidity in the banking system. The bank will also continue to supply daily ringgit liquidity to banks via various tools under open market operations, including the outright purchase of government securities, FX swaps, reverse repos and the standing facility.
The bank has also taken preemptive measures to boost liquidity through the recent reduction in statutory reserve requirement (SRR) ratio by 100 basis points.
With the additional SRR flexibilities granted to principal dealers, this has released approximately RM30 billion worth of liquidity into the banking system. In addition, the amount of excess liquidity in the system amounts to RM160 billion.
Of this, approximately RM100 billion placements with the bank under open market operations can also be used to meet the liquidity needs of the banking system. The bank will continue to closely monitor developments and ensure sufficient liquidity in the financial system at all times.
Additional supervisory and prudential measures
The banking system is facing these challenges from a position of strength, with excess capital buffers above the minimum regulatory requirement of RM119.7 billion as at end of January.
To enable banking institutions to support their customers and proactively manage risks arising from current developments, the bank has reviewed its planned regulatory and supervisory activities in 2020 to ease compliance and operational burdens on banking institutions.
As part of this review, policy and supervisory initiatives will be refocused on monitoring and responding to risk developments and ensuring that banking institutions continue to be a source of strength for the Malaysian economy.
In this connection, banking institutions will be allowed to draw down on capital and liquidity buffers which were built up over the years to support lending activities.
To this effect, banking institutions may drawdown on the capital conservation buffer of 2.5%, operate below the minimum liquidity coverage ratio of 100%, and utilise the regulatory reserves that were set aside during periods of strong loan growth. The bank fully expects banking institutions to restore their buffers within a reasonable period after Dec 31, 2020.
The implementation of the net stable funding ratio (NSFR) will proceed as scheduled on July 1. However, the minimum NSFR will be lowered to 80% and banking institutions will be required to comply with the requirement of 100% from Sept 30, 2021.
The bank will be extending the timeline for all ongoing consultations on published discussion papers and exposure drafts to June 30 and beyond.
Flexibilities will also be provided for banking institutions to meet timelines for regulatory submissions to take into account the efforts being undertaken by the government to contain the spread of Covid-19.
BNM said with these flexibilities and the sustained resilience of the banking system, which is underpinned by sound prudential and risk management practices, Malaysian banking institutions are well-placed to respond to the needs of the economy during this challenging period.
The flexibilities form part of the new measures that will be put in place under the Second Economic Stimulus Package 2020, to alleviate the challenges faced by individuals and businesses affected by the Covid-19 outbreak, preserve jobs and ensure the continuity of viable businesses.
CLICK HERE FOR THE LATEST DATA ON THE COVID-19 SITUATION IN MALAYSIA