House extends approval deadline for banking bill<\/p>\n
JAKARTA (JP): The House of Representatives (DPR) extended on
\nThursday the deadline for approving the country's banking bill to
\nOct. 16 from the earlier schedule of Sept. 29 to allow more time
\nto debate the government-proposed draft law.<\/p>\n
The bill will amend the 1992 Banking Law, which is deemed
\nineffective to restructuring the troubled banking sector and
\nparticularly to clean up the sector's mounting bad assets.<\/p>\n
\"The time given to us is not enough because of the enlargement
\nof the substantial issues to be discussed,\" said I Gede Artjana,
\nhead of House Commission VIII on banking, on the first day's
\nhearing on the bill with Minister of Finance Bambang Subianto and
\nBank Indonesia Governor Sjahril Sabirin.<\/p>\n
Bambang proposed the new banking bill to the House on Aug. 24,
\nand the commission will debate the amended clauses during the
\nremaining weeks before submitting the bill to a plenary session
\nahead of the Oct. 16 deadline.<\/p>\n
One of the important clauses is giving legal power to the
\nIndonesian Bank Restructuring Agency (IBRA) and its asset
\nmanagement unit (AMU) to acquire the nonperforming loans (NPLs)
\nof the country's commercial banks and sell them.<\/p>\n
The clause related to banking secrecy, which at present
\nprotects names of both depositors and borrowers, will also be
\namended to allow the monetary authority to unveil the identity of
\nlarge debtors.<\/p>\n
IBRA chairman Glenn S. Yusuf said the legal power was needed
\nin order to be able to sell the collateral of the NPLs which is
\nmostly in the form of property located in the Jakarta golden
\ntriangle prime business district.<\/p>\n
He said on Wednesday that the NPLs would go on sale
\nimmediately after the amended banking law becomes effective.<\/p>\n
In the wake of tight domestic liquidity, the only potential
\nbuyers for the bank assets are foreign investors.<\/p>\n
Other crisis-hit nations like Thailand have already started
\nselling the bad assets to foreign investors, thereby leaving
\nIndonesia further behind in the chase for the limited pool of
\noverseas money due to the postponement of the banking bill's
\napproval.<\/p>\n
Bambang estimated the NPLs would reach a massive 50 percent of
\nthe more than Rp 600 trillion (US$50 billion) of banks'
\noutstanding loans, or more than 40 percent of gross domestic
\nproduct.<\/p>\n
The new banking bill will also eliminate foreign ownership
\nrestrictions of domestic commercial banks, which is currently
\ncapped at 49 percent.<\/p>\n
Banking transparency will also be improved by allowing the
\nbanks' asset side of balance sheets to be disclosed to the
\npublic.<\/p>\n
\"This is what scared most bankers because the allocation of
\ntheir credits can be made known to the public,\" a government
\nsource said.<\/p>\n
He said that local bankers had generally breached the legal
\nlending limit by channeling more than the allowed 20 percent
\ncredit to affiliated parties.<\/p>\n
He added that under the new banking regulation, the legal
\nlending limit would be raised to 30 percent. (rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/house-extends-approval-deadline-for-banking-bill-1447893297",
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