Contact BNM if bank refuses to shorten loan period

KUALA LUMPUR: Borrowers have the right to ask banks to shorten their debt repayment period when they can afford to increase payments.

According to Governor of Bank Negara Malaysia, Datuk Nor Shamsiah Mohd Yunus, the borrower can make a complaint to Bank Negara if a bank refuses to grant permission.

"We have also heard complaints from some borrowers that they have not been given the option to shorten the repayment period.

"I assure you that the borrowers have the right to increase the instalment payment as soon as they are ready to do so as this will reduce the cost of their loan. If they have a problem with the bank, please contact Bank Negara," she said.

She said this in reaction to the borrowers’ grievance which claimed that the loan repayment period was extended, thus increasing the overall loan cost.

The extension of the period does occur when the restructuring is done, she added.

"Banks offer targeted repayment assistance to reduce the borrower's cash flow burden including reducing the monthly instalments that borrowers have to pay.

"When the loan instalment is reduced, the time taken to repay the loan will be longer and will increase the cost of the loan.

"In most cases, a long loan period is only an indication if the reduced loan amount remains constant throughout the loan period," she said.

Thus, Shamsiah urged borrowers to contact bank officials and obtain clear terms on repayment assistance and the impact on loan costs.