Banks have prompted the Financial Solutions Authority (OJK) to extend its financial obligation relief program as the COVID-19 pandemic has yet to reveal indications of slowing down.
Association of State-Owned Banks (Himbara) chairman Sunarso said on Monday the banks had actually asked the authority to extend its loan restructuring relaxation program by at least another year.
” The policy has actually been actually useful for the banking market and the genuine sectors,” he stated throughout a live-streamed press conference following a meeting in between the OJK and 15 of the nation’s most significant banks.
The policy, stated under OJK Policy No. 11/2020 provided in March, unwinds debt quality assessment and restructuring requirements for debtors that are hit hard by the COVID-19 outbreak.
Indonesian banks now only examine the quality of a loan worth as much as Rp 10 billion (US$683,275) based upon a debtor’s timeliness in paying the loan’s principal and interest without needing to evaluate the debtor’s organisation prospects and monetary condition.
Banks are likewise enabled to state reorganized loans as great loans despite their decreasing quality due to the pandemic, not classify them as non-performing loans (NPL) and not set aside provisions for them.
These relaxations are applicable for one year up until March 2021 and are focused on for micro, small and medium business (MSMEs) and recipients of the government’s microcredit program (KUR), according to the policy.
The lenders’ proposition to extend the financial obligation relief program came following signs of a sluggish economic recovery. Regardless of recent relaxations of social restrictions, organisations and customers are still hesitant to fully return to service as the country has actually seen a dive in infections.
Indonesia has actually recorded at least 80,000 COVID-19 cases of Wednesday afternoon, with over 39,000 deaths, official data programs.
The federal government now predicts the economy to shrink by more than 3 percent in the 2nd quarter and by an additional 1 percent in the 3rd quarter, which indicates the nation will go into a recession. The gross domestic product (GDP) grew by 2.97 percent in the first quarter, the lowest in 19 years.
Responding to the bankers’ request, OJK chairman Wimboh Santoso stated the company would review the possibility of extending the financial obligation relief program.
” We would look at the numbers [of the restructured loans] and the sectors [that received the relief], and we hope that we can have [the data] by the 3rd quarter.”
Indonesian banks have restructured a total of Rp 769.55 trillion in loans as of July 6, according to OJK data. Some Rp 326.38 trillion worth were MSME loans from 6.72 debtors and the remaining Rp 443.17 trillion were non-MSME loans from 1.31 million debtors.
On the other hand, multifinance companies have restructured Rp 141.45 trillion in financing from 3.89 million agreements in 183 firms since July 7.
The extension is expected to enhance the banking and financial sector’s confidence so they can have more space to disburse more loans to assist support the nation’s financial development, stated Wimboh.
Indonesia tape-recorded a 3.04 percent loan growth in Might, slower than 5.73 percent recorded in April.
Other than requesting an extension for the loan restructuring program, Wimboh said banks likewise hoped that the federal government would accelerate its costs and that state-owned companies would continue their tasks to spur domestic need and boost loan demand.
Indonesian Banks Association (Perbanas) chairman Kartika “Tiko” Wirjoatmodjo expressed his optimism that banks could start paying out new working capital loans to MSMEs and corporations by the 4th quarter of this year.
