The Covid-19 pandemic has left an indelible mark on society. It has jolted nations, communities and businesses, upending life as we knew it.
Economies have stalled, causing millions across the globe to lose their jobs. Recovery has been fraught with challenges in the form of new Covid-19 variants.
Malaysia too has felt the brunt of the pandemic, with the containment measures impacting revenue for businesses and forcing job and salary cuts.
Beyond its public health impact, the prolonged pandemic has disproportionately affected Malaysians in the lower income segment. Many of these individuals continue to grapple with loss of employment or a substantial reduction in income.
While there have been financial relief packages such as PEMULIH and PEMERKASA, along with the PRIHATIN economic stimulus package to help provide breathing space to those in need, the reality remains that many Malaysians, particularly those in the B50 category, will require more time and assistance to get back on their feet.
As we enter a new endemic phase enabled by a largely-vaccinated population, economies have started to reopen with early signs of recovery. However, for the most vulnerable segments of society, many of whom have depleted their savings, it will take longer to rebuild their livelihoods.
It makes sense that banks, AKPK and the authorities have taken a more holistic approach to help B50 borrowers, to ensure that those in the B50 group continue receiving the assistance they need until their financial circumstances improve.
In collaboration with the Credit Counselling and Debt Management Agency (AKPK), the Financial Management and Resilience Programme (URUS) is being introduced to provide support to vulnerable individuals who want to not only survive the pandemic but also get their finances in order.
URUS was conceptualised as a comprehensive solution that also addresses the specific needs of B50 borrowers. Banks are contributing approximately RM1 billion for this programme to provide these vulnerable borrowers with financial relief, including interest/profit waivers.
In order to help B50 borrowers in need weather their financial challenges, the programme provides cash flow support to eligible borrowers by way of a three-month interest/profit waiver. The programme has been moulded to be similar to existing AKPK debt management schemes, which have successfully aided more than 324,000 borrowers.
Borrowers can also opt to reduce their instalment amount for a period of 24 months, together with the three-month interest/profit waiver. The assistance is also extended to those with unsecured personal financing and credit cards.
While early impressions within the market have been positive, observers have also noted that implementation and outreach will be key to the programme’s success.
Bursa Malaysia chairman Abdul Wahid Omar said: “The URUS programme is certainly timely and a positive move forward by the banks and AKPK. It is encouraging to see the willingness of the banking sector to step up to extend their assistance to vulnerable borrowers.
“With effective implementation, the programme should be able to achieve its purpose to help these B50 borrowers get back on their feet. Depending on outreach efforts, the take-up rate and effectiveness of the programme, I am hopeful that we would be able to eventually see a positive knock-on effect in the domestic market.”
Under URUS, those with borrowings from multiple banks need not apply for assistance from every bank with which they have loans or financing. Borrowers can apply for assistance on all their loan/financing facilities through any one of their banks.
AKPK will also provide a personalised financial plan for borrowers in the URUS scheme to assist them with guidance throughout the programme period. The plan aims to provide guidance to borrowers so that they are able to take remedial steps towards improving their financial position.
With the right support and encouragement, B50 borrowers who continue to struggle with financial challenges should be able to make gradual progress towards finding their financial footing post-pandemic. AKPK will initiate a review of the plan once the financial circumstances of the borrower show sustainable improvement.
Chief economist and head of AmBank Research, Anthony Dass, said: “URUS provides an opportunity for banks to apply meaningful and more long-term solutions for fiscal challenges faced by their customers.
“The economy will benefit from these B50 borrowers completing the different repayment assistance programmes they are depending on and ultimately be able to rebound well enough and sustain their financial health to meet their debt obligations and contribute to the economy.
“Besides, there is a need for more job creation to provide greater certainty in terms of income flow for the B50 group that will then potentially reduce the risk of them continuously needing to seek financial assistance and also provide an opportunity for them to move away from being in the ‘stressed’ credit group.”