11 finance companies' licenses suspended<\/p>\n
JAKARTA (JP): The government has suspended operational
\nlicenses of at least 11 companies, according to Director General
\nfor Financial Institutions Bambang Subianto.<\/p>\n
Bambang told a hearing of Commission VII of the House of
\nRepresentatives yesterday that the 11 companies were part of the
\n254 financing companies now registered with the Ministry of
\nFinance.<\/p>\n
He, however, did not explain the reasons for the suspensions
\nand when the measures were taken.<\/p>\n
In addition, Bambang said that around 30 of the financing
\nfirms have not been fully operational.<\/p>\n
He said that the outstanding offshore loans of financing
\ncompanies -- those involved in leasing, factoring and consumer
\nfinancing -- increased by nearly 30 percent to Rp 9.2 trillion as
\nof April this year, from Rp 7.2 trillion as of April 1994.<\/p>\n
Bambang said that the financing companies' offshore loans were
\nstill too high and that they would be further curtailed this year
\nin a bid to reduce the money supply at home.<\/p>\n
\"The uncontrollable increase in the offshore loans would cause
\nan excessive supply into the economic liquidity which will, in
\nturn, result in stronger inflationary pressure,\" he told the
\ncommission, which is in charge of banking, financing, trade and
\ncooperatives.<\/p>\n
Bambang said that the government's decision last December to
\ncurb financing companies' offshore loans would be maintained in
\nthe current fiscal year.<\/p>\n
The Minister of Finance issued surprising measure late last
\nyear to improve its control against the financing companies
\nwhich, according to some reports, were often used by banks to
\nbreak their legal lending limits.<\/p>\n
The measures include the limitation of their offshore loans to
\na maximum of five times their equity, in addition to the
\nappointment of the central bank to help supervise the financing
\nfirms.<\/p>\n
Bambang said that in addition to offshore loans, the central
\nbank's supervision would include the monitoring of the financing
\nfirms' lending activities so that their credits would not exceed
\nthe indicative target of the overall credits in the current
\nfiscal year.<\/p>\n
The government is limiting credit growth to 19 percent this
\nfiscal year in a bid to cool economic overheating. (hen)<\/p>",
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