BI monitors loans for housing<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The central bank warned banks against concentrating their loan
\nexposure in the property and housing sector, reportedly on the
\nrise recently, to counter-balance the negative effect of their
\nnon-performing loans (NPLs).<\/p>\n
Bank Indonesia deputy governor Maman Sumantri said on Tuesday
\nthe banks should avoid extending too much credit to the sector,
\nas it could increase the risk of default.<\/p>\n
\"What should properly be monitored is, for example, loans for
\nproperty. We need to check on whether such loans have been
\nconcentrated in that sector,\" he said.<\/p>\n
Currently, while banks remain reluctant to extend loans to the
\ncorporate sector, they have been focusing their loan exposure to
\nconsumers in the form of car and house loans taking up the
\nlargest portion.<\/p>\n
The declining trend in the central bank's benchmark interest
\nrate (SBI) -- which has led to a decline in bank interest rates
\nfor loans -- provides further leeway for the rise in public
\ndemand for consumer loans, including housing.<\/p>\n
However, with the SBI predicted to change course next year
\nlargely because of the general elections, concerns are high that
\nthe current boom in property loans could lead to a massive
\ndefault.<\/p>\n
Analysts said that during the elections, dozens of political
\nparties are expected to spend huge sum of money as part of their
\npolitical campaigns, resulting in an oversupply of base money,
\nwhich could push inflation up.<\/p>\n
It is to accommodate such a situation that Bank Indonesia
\nwould likely have no choice but to increase the SBI rates, they
\nsaid. Things could get even worse if the elections or the
\ncampaigns become chaotic.<\/p>\n
Bank Indonesia Governor Burhanuddin Abdullah has mentioned the
\nproblems by saying that the country's NPLs, on average, had a
\ntendency to go up because of this, despite the fact that the
\ncurrent average gross NPL level of 8.3 percent is deemed as
\nrelatively healthy.<\/p>\n
However, Bank Mandiri, the country's largest bank, brushed
\naside suggestions that extending loans for the housing sector
\nwould create greater risk for the banking sector.<\/p>\n
Mandiri vice president I Wayan Pugeg said instead that loans
\nfor housing were among the safest for banks.<\/p>\n
\"Credit for housing is very \"safe\", because usually we get up
\nto 30 percent to 40 percent of the total from the down payment.<\/p>\n
\"This leaves the balance at only around 60 percent to 70
\npercent. So, I think it's very safe lending,\" Pugeg said.<\/p>\n
He added that Mandiri's NPL level was currently at 7 percent.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/bi-monitors-loans-for-housing-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }