State firms take over subsidized loans<\/p>\n
JAKARTA (JP): Bank Indonesia (BI) has formally handed over the
\nmanagement of government-sponsored credit to three state
\nfinancial companies: Bank Rakyat Indonesia (BRI), PT Bank
\nTabungan Negara (BTN) and Permodalan Nasional Madani (PNM)<\/p>\n
BI Governor Sjahril Sabirin said freeing the central bank from
\nthe task of managing the subsidized loans program was in line
\nwith the 1999 central bank independency law.<\/p>\n
\"This is one big part of the efforts towards achieving the
\nindependency of the central bank as stipulated in the 1999
\ncentral bank independency law,\" he said at the signing ceremony
\nat the central bank building.<\/p>\n
The signing ceremony was also attended by the executives of
\nBRI, BTN and PNM.<\/p>\n
According to the agreement signed on Monday, BRI will take
\ncare of three subsidized loan programs, namely, credit for
\nfarming activities (KUT), credit for cooperatives and credit for
\nthe members of sugar cane cooperatives.<\/p>\n
The total facility of these loans as of Oct. 31, 1999 stood at
\nsome Rp 9.6 trillion, according to BI data.<\/p>\n
BTN will have the authority to manage the subsidized loan
\nprograms on credit for cheap housing facilities, with a total
\nloan facility of some Rp 2.8 trillion as of the same month.<\/p>\n
PNM will manage the credit for members of fishermen and
\npoultry husbandry cooperatives and other credit for various weak
\neconomic sectors which amounts to some Rp 9.2 trillion in total.<\/p>\n
The central bank independency law, ratified in May this year,
\nrequires the central bank to end its task of extending soft loans
\nas not to conflict with the central bank's more important role of
\nsupervising the banking system.<\/p>\n
The law was passed to replace a widely-criticized and
\nineffective 1968 law and to boost the central bank's independency
\nwhile freeing it from government intervention during its policy
\nmaking activities.<\/p>\n
According to the new law, BI should focus its duties on:
\nimplementing monetary policy, managing and maintaining a fluent
\npayment system and managing and supervising the banking system.<\/p>\n
The law also limits the central bank from supporting
\ncommercial banks facing liquidity problems.<\/p>\n
BI, as the lender of last resort, is limited to providing a
\nmaximum 90 days of credit liquidity facilities to commercial
\nbanks.<\/p>\n
The liquidity credit facilities must be backed 100 percent by
\nhigh quality and liquid assets such as the central bank's Bank
\nIndonesia promissory note (SBI). (udi)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/state-firms-take-over-subsidized-loans-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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