Government urged to take action against bad loans<\/p>\n
JAKARTA (JP): Banking analysts have again urged the government
\nto do something about banks' \"unacceptable levels\" of bad loans.<\/p>\n
I. Nyoman Moena, a supervisor from the Federation of
\nIndonesian National Private Banks (Perbanas), said Tuesday the
\nbad loans, which totaled Rp 10.34 trillion (US$4.4 billion) at
\nthe end of August or around 3.4 percent of outstanding credits,
\nexceeded an acceptable 3 percent level.<\/p>\n
\"The acceptable level of bad loans is 3 percent of total
\ncredits.\" he said. \"If bad loans exceed the tolerable limit,
\nbanking activities can be adversely affected.\"<\/p>\n
If the government does not solve the bad loan problem
\nimmediately it could worsen, Moena said at the sidelines of a
\nbanking seminar organized by STIE Perbanas, the federation's
\nschool of economics.<\/p>\n
\"You must seek a quick solution. Otherwise, the growth target
\nof 7 percent per annum in the current development plan is
\nunachievable,\" he said.<\/p>\n
Bank Indonesia Governor J. Soedradjad Djiwandono said last
\nweek that banks' bad loans at the end of August totaled Rp 10.34
\ntrillion, or 3.4 percent of their total credits.<\/p>\n
The seven state banks had bad loans of Rp 7.07 trillion or
\nabout 70 percent of all domestic bad loans.<\/p>\n
The state banks' bad loans had increased from Rp 6.39 trillion
\nat the end of last December, according to the central bank.<\/p>\n
The bad loans at state banks -- Bank Negara Indonesia 1946
\n(BNI), Bank Pembangunan Indonesia (Bapindo), Bank Bumi Daya, Bank
\nRakyat Indonesia, Bank Dagang Negara, Bank Ekspor Impor Indonesia
\nand Bank Tabungan Negara -- accounted for 2.33 percent of their
\ntotal outstanding credits, down from 3.39 percent at the end of
\nlast December.<\/p>\n
Speaking at a hearing with the House of Representatives'
\nbudgetary commission, the central bank governor said national
\nprivate banks had bad loans of Rp 2.19 trillion, up from Rp 1.43
\ntrillion at the end of last December.<\/p>\n
Thomas Suyatno, a bank federation executive and House member,
\ndescribed the bad loans as \"very worrisome\".<\/p>\n
\"We hope the government will soon find an appropriate solution
\nto deal with the non-performing loans,\" he said.<\/p>\n
The central bank formed a special team two years ago to settle
\nthe state banks' bad loans. But the team, comprising senior
\nofficials of the central bank and state banks, has been widely
\ncriticized for working too slowly.<\/p>\n
Thomas suggested the team be expanded to include senior
\nofficials from the Ministry of Justice, Supreme Court, Attorney
\nGeneral's Office, police, Agrarian Agency, Ministry of Finance
\nand other agencies.<\/p>\n
The bigger team would be more objective in its solutions, said
\nThomas, also the rector of Jakarta's Catholic Atmajaya
\nUniversity.<\/p>\n
The best solution is to reschedule the bad loans, he said.<\/p>\n
Borrowers should be sued if they can no longer service and
\nrepay their loans, he said. (hen)<\/p>",
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