KUALA LUMPUR: AllAi??commercial banks will takeAi??immediate steps to reduceAi??the monthly loan repaymentAi??instalments for facilitiesAi??with interest rates peggedAi??to the base lending rateAi??(BLR).
This is to help borrowersAi??in the current challengingAi??environment, theAi??Association of Banks inAi??Malaysia (ABM) said in aAi??statement yesterday.
The move came in the wakeAi??of the announcement by BankAi??Negara Malaysia yesterdayAi??that its benchmark overnightAi??policy rate (OPR) will beAi??reduced by another 50 basisAi??point to two per cent fromAi??2.50 per cent.
The new BLR will beAi??published by the banksAi??individually in the daysAi??ahead, like in the cases ofAi??the previous rounds of OPRAi??cuts in November 2008 andAi??January 2009, ABM said.
The reduction in theAi??monthly loan repaymentAi??instalments is intended toAi??give an added impetus to theAi??lowering of the banksai??i??respective BLR in line with the OPR cut, it said.
With the lowering of theAi??BLR, banks have the optionAi??of either retaining theAi??tenure of the loan andAi??reducing the monthly loanAi??repayment instalments orAi??shortening the tenure of theAi??loan while maintaining theAi??amount of their customersai??i??Ai??monthly loan repaymentAi??instalment, ABM said.
ai???Since the first option willAi??be translated intoAi??immediate, real benefit andAi??savings for bank customersAi??with facilities pegged to theAi??BLR, a decision was madeAi??among the banks for anAi??adjustment of the monthlyAi??loan repayment instalmentsAi??downwards for all suchAi??facilities across the board,ai???Ai??the association said.
ai???Changes in the systemAi??will be necessary and banksAi??will endeavour toAi??implement the downwardAi??revision of the amount of theAi??monthly loan repaymentAi??instalments as fast as theyAi??can,ai??? it said.
Depending on the customerAi??base and type of facilities, it isAi??anticipated that the reductionAi??will be completed only aroundAi??the end of the first quarter ofAi??2009, ABM said.
Banks will only beAi??officially notifying theirAi??customers on the quantumAi??of reduction of the monthlyAi??low repayment instalmentsAi??and the effective dateAi??directly, it said.
According to ABM, theAi??lower monthly loanAi??repayment instalments willAi??allow for more disposableAi??income to be in the hands ofAi??the public.
The association also reaffirmed its member banksai??i?? commitment to continue to be reasonable as well as responsive to the publicai??i??s needs.
Bank customers whoAi??prefer to retain the amountAi??of their monthly loanAi??repayment instalments canAi??contact their respectiveAi??banks immediately, it said.