KUALA LUMPUR: All commercial banks will take immediate steps to reduce the monthly loan repayment instalments for facilities with interest rates pegged to the base lending rate (BLR).
This is to help borrowers in the current challenging environment, the Association of Banks in Malaysia (ABM) said in a statement yesterday.
The move came 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 point to two per cent from 2.50 per cent.
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, ABM said.
The reduction in the monthly loan repayment instalments is intended to give an added impetus to the lowering of the banks’respective BLR in line with the OPR cut, it said.
With the lowering of the BLR, banks have the option of either retaining the tenure of the loan and reducing the monthly loan repayment instalments or shortening the tenure of the loan while maintaining the amount of their customers’ monthly loan repayment instalment, ABM said.
“Since the first option will be translated into immediate, real benefit and savings for bank customers with facilities pegged to the BLR, a decision was made among the banks for an adjustment of the monthly loan repayment instalments downwards for all such facilities across the board,” the association said.
“Changes in the system will be necessary and banks will endeavour to implement the downward revision of the amount of the monthly loan repayment instalments as fast as they can,” it said.
Depending on the customer base and type of facilities, it is anticipated that the reduction will be completed only around the end of the first quarter of 2009, ABM said.
Banks will only be officially notifying their customers on the quantum of reduction of the monthly low repayment instalments and the effective date directly, it said.
According to ABM, the lower monthly loan repayment instalments will allow for more disposable income to be in the hands of the public.
The association also reaffirmed its member banks’ commitment to continue to be reasonable as well as responsive to the public’s needs.
Bank customers who prefer to retain the amount of their monthly loan repayment instalments can contact their respective banks immediately, it said.