Party deputy president Mohamad Hasan said this included the expansion and extension of tailored payment assistance and relief measures for vulnerable households and businesses.

“It is certainly in the collective best interest of the banking industry to continually support viable businesses and households throughout this challenging period,” Mohamad, better known as Tok Mat, said in a statement.

He said banks were “resilient enough” to accommodate such a policy, adding that net profits posted by several major banks showed that the six-month automatic moratorium did not cause them losses as forecast earlier.

Last month, the central bank revealed that the amount of NPL reached RM28.7 billion at end-2020.

Mohamad said an upward trend in total impaired loans was observed among households, wholesale and retail trade, restaurants and hotels after the blanket loan moratorium ended.

For households, he said, the loss of income and unemployment impaired the ability to service loan commitments especially for those highly indebted individuals, contributing to a rise in impaired loans.

The default of loan repayment among business borrowers was due to loss in revenue and business closures, particularly in tourism-related, retail and recreational sectors.

Mohamad also pointed out that Bank Negara Malaysia has stated that overall impairments could rise to above 4% of loans by the end of 2021, mainly driven by the business segment.

“This is worrying as the impact of rising NPL rates could extend beyond the financial sector and hinder Malaysia’s economic recovery efforts.”