TEMPO Interactive, Jakarta: Bank Indonesia (BI) has started to become concerned over the rapid growth of consumer credit.
Agusman, BI's senior researcher from the Banking Assessment and Regulations Directorate, said that an increase in consumer credit that is not balanced by improvements in credit quality might cause instability in the banking industry.
“This instability will occur if household incomes are insufficient,” he said some time ago.
High consumer credit growth is in line with growth in the amount of non-performing loans (NPLs) in the sector.
BI data shows that disbursement of consumer credit up until October 2007 reached Rp269.4 trillion.
Around Rp268.5 trillion of this amount was disbursed in Rupiah currency, while Rp874 trillion was in other currencies.
The types of consumer credit include house-ownership loans, unsecured loans, vehicle loans and credit cards.
Consumer credit disbursed in October 2007 was dominated by vehicle loans.
In addition, other credit totaled Rp21.6 trillion, followed by housing loans of Rp17.4 trillion.
Credit from credit cards amounted to Rp4.6 trillion.
Agusman went on to say that concern over national economic growth was also influenced by the global economy.
The sub-prime mortgage crisis in the United States will also influence the global economy.
“If the turmoil continues for long, a lot of businesses will close down and cause employment problems,” he said.
In the end, public income becomes insufficient.
This situation could result in an increase of the NPL ratio for consumer credit, especially as regards credit cards and housing loans.
Lani Darmawan, a member of the Indonesian Credit Card Association Executive Council, said that there had in fact been improvements in consumer credit performance this year, compared to the previous year.
“We continue increasing risk-management ability to lower the NPL rate,” Lani told Tempo.