Skip to main content
Best News Website or Mobile Service
 
WAN-IFRA Digital Media Awards Worldwide
Best News Website or Mobile Service
 
Digital Media Awards Worldwide
Hamburger Menu

Advertisement

Advertisement

Business

Indonesia to extend loan relief for some pandemic-hit sectors

Indonesia to extend loan relief for some pandemic-hit sectors

FILE PHOTO: Labours work on a construction as smog covers Jakarta, Indonesia, June 24, 2021. REUTERS/Willy Kurniawan

JAKARTA : Indonesia's financial regulator plans to extend regulations for loan forbearance for some sectors that have yet to recover from the impact of the COVID-19 pandemic beyond a March 2023 deadline, a senior official said on Tuesday.

The Financial Services Authority, known by its Indonesian acronym OJK, has since March 2020 provided incentives to banks to restructure loans for debtors suffering during the pandemic.

The rules means lenders do not have to set aside provisions for souring loans and have helped prevent a spike in the non-performing loan (NPL) ratio.

Dian Ediana Rae, OJK's newly appointed chief banking supervisor, said policymakers had already agreed to selectively extend the regulation, but were still discussing how long this should be for and the sectors it should apply to.

A decision would formally be announced in the coming two months, he said.

"The extension won't be given across the board...to make sure it won't create a moral hazard," he told a news conference.

As of July, the amount of loans under restructuring by debtors affected by the pandemic stood at 560.41 trillion rupiah ($37.65 billion), OJK data showed, compared with more than 900 trillion rupiah in 2020.

The NPL ratio was at 2.9 per cent in July.

The food, real estate and accommodation sectors had not yet recovered from the pandemic, Dian said, without confirming what sectors that would be covered by the extension.

Ratings agency Fitch in a market commentary issued last week said Indonesian banks had built a moderate level of provision covering 200 per cent of NPLs as of April and around 64 per cent of total outstanding loans under restructuring in connection with the pandemic, in preparation for the winding down of OJK's regulatory forbearance.

Slamet Edy Purnomo, a deputy commissioner for banking supervision at OJK, told the same event that the banking industry has revised its 2022 loan growth target to 10.33 per cent, up from 9.5 per cent, according to media reports, due to strong demand.

($1 = 14,885.0000 rupiah)

Source: Reuters

Advertisement

Also worth reading

Advertisement