Banks criticized for write-off of bad loans<\/p>\n
JAKARTA (JP): Accountants yesterday criticized commercial
\nbanks' recent steps to write off part of their bad loans to
\nimprove their image in their financial reports.<\/p>\n
Chairman of the Indonesian Accountants Association (IAI)
\nKatjep K. Abdoelkadir said in a seminar yesterday that a bank
\ncould not directly write off a creditor's bad debt without using
\ngeneral accounting procedures.<\/p>\n
\"A bank has to initially evaluate a debtor's business and then
\nto consider it as totally bankrupt before it files the credit
\ncase to the court for writing off the debtor's borrowing.\" Katjep
\nsaid.<\/p>\n
Bank Indonesia Governor Soedradjad Djiwandono disclosed to
\nCommission VII of the House of Representatives (DPR) in a hearing
\nhere on Wednesday that several banks had written off part of
\ntheir bad loans.<\/p>\n
Katjep said a bank should get permission from the court before
\nwriting off its bad loans and seizing and selling the debtor's
\ncollateral.<\/p>\n
He said the public does not completely believe the financial
\nstatements of commercial banks after a Rp 1.3 trillion (US$620
\nbillion) loan scandal, which involved the state-owned Bank
\nPembangunan Indonesia (Bapindo) and the Golden Key Group of
\ncompanies. A Bapindo executive and Golden Key's president are
\ncurrently on trial in the South and Central Jakarta district
\ncourts.<\/p>\n
Katjep said the write-off policy might be aimed at regaining
\nthe public's confidence.<\/p>\n
According to a Bank Indonesia director, Hendrobudiyanto, a
\nbank can write off bad loans after their borrowers fail to repay
\ndebts for three consecutive years.<\/p>\n
Katjep said the three-year period is too long if the loans are
\nobviously unpayable.<\/p>\n
The chief of the Ethics Code Committee of IAI, Theodorus
\nTuanakota, said the period depends on the quality of the loans.
\nIt can be below three years if the loans are small and more than
\nthree years if they are large.(02)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/banks-criticized-for-write-off-of-bad-loans-1447893297",
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