Bad loans at banks still rising<\/p>\n
JAKARTA (JP): Bad loans at the country's commercial banks
\nincreased to 3.97 percent of outstanding credits as of last
\nJanuary, from 3.88 percent last September and 3.53 in March last
\nyear.<\/p>\n
Governor of Bank Indonesia (the central bank) J. Soedradjad
\nDjiwandono disclosed the increase at a hearing with the Trade and
\nFinance Commission of the House of Representatives yesterday.<\/p>\n
The governor did not give real figures for the bad loans
\nhowever, saying that the increase generally did not represent the
\nactual development at commercial banks.<\/p>\n
According to the central bank's weekly report dated Feb. 15,
\ncommercial banks' credits stood at Rp 187.61 trillion last
\nDecember.<\/p>\n
Hedrobudiyanto, managing director of Bank Indonesia, explained
\nthat commercial banks' bad loans recorded by the central bank
\nbetween September 1994 and January 1995 reached Rp 900 billion
\n(US$409 million).<\/p>\n
However, Hendro noted that the newly recorded bad loans might
\nhave occurred long before the September to January period but the
\ncentral bank only discovered them during the period.<\/p>\n
\"Figures for bad loans may increase further, not because of a
\nreal increase in loans going sour but because of new findings
\nfrom our on-site examinations,\" he added.<\/p>\n
Soedradjad said that despite the increase in bad loans,
\nproblem loans decreased to 9.14 percent of the total outstanding
\ncredits as of January, from 9.5 percent last September and 9.92
\npercent in December 1993.<\/p>\n
Collectibility<\/p>\n
He said the collectibility rate of loans provided by
\ncommercial banks increased to 87.34 percent of their outstanding
\ncredits as of January, from 86.94 percent last September and
\n85.83 percent in December 1993.<\/p>\n
The average capital adequacy ratio of the country's banks rose
\nto 12.5 percent last December from 9.9 percent at the end of
\n1993, while the number of banks which observed legal lending
\nlimits increased to 81 percent from 75 percent in the same
\nperiod.<\/p>\n
Soedradjad said that Indonesian banks had slowed down their
\nextension of loans to the property sector because the sector has
\nbeen blamed as the most possible stimulant of economic
\noverheating.<\/p>\n
The growth of credits extended to the property sector last
\nJanuary dropped to 1.8 percent from an average of three to 4.9
\npercent a month within the April to December period of last year.<\/p>\n
When asked about Bank Indonesia's efforts to curb future
\nincreases in bad loans, Soedradjad said that the central bank
\nwill soon issue commercial banks guidelines in formulating credit
\npolicies.<\/p>\n
\"Commercial banks will have to follow these guidelines when
\nformulating their credit policies,\" he said. \"The guidelines are
\nexpected to improve the banks' internal supervision and the
\nquality of their loans.\"<\/p>\n
He explained that the guidelines will include the tasks and
\nauthority of banks' commissioners, procedures for loan approval,
\nways to evaluate credit, credit supervision systems and
\nprocedures to settle bad loans. (rid)<\/p>",
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