Bad loans increase at state banks
Bad loans increase at state banks
JAKARTA (JP): Bad loans in the country's seven state-owned banks persisted throughout the first nine months of this year, despite the central bank's supposed commitment to dealing with debt problems.
Bank Indonesia (central bank) Governor J. Soedradjad Djiwandono said here yesterday that the overdue loans in state banks rose to 3.88 percent of their outstanding credits as of September from 3.53 percent as of March and 3.34 percent as of last December.
Soedradjad did not give real figures for the bad loans in the seven state banks but based on the central bank's weekly report of Nov. 23, the unpaid loans may have reached Rp 3 trillion (US$1.4 billion) as of September, rising from Rp 2.67 trillion as of March and Rp 2.46 trillion as of last December.
Speaking at a hearing with Commission VII of the House of Representatives (DPR), the central bank governor attributed the increase in the bad loans to the failure of borrowers to improve their business performances.
He said that many borrowing companies in certain industrial sectors, such as the textile processing, failed to perform well due to their technical inabilities to adjust to rapid changes in market demand.
"The increase in bad loans was partly the result of the rise in the volume of doubtful loans turning sour," he told the commission, which is in charge of trade and finance.
Soedradjad acknowledged that the establishment of a special task force to handle bad state bank loans in April last year has not yet shown results. Progress, he said, will not only take time but also require much perseverance, especially in bringing concerned parties to the same conclusion.
Solution
Approaches in dealing with the problem loans include rescheduling, reconditioning and restructuring and if the bad loan situation could not be resolved through such approaches, he said, the bad debt case would then be handed over to BUPLN, the government's court-like agency that executes government claims.
Soedradjad said that to effectively handle the debt problems, the government is currently considering the establishment of a special institution to take over bad loans from state banks.
He said that such an institution might be jointly established by the seven state banks, which comprise of Bank Tabungan Negara (BTN), Bank Dagang Negara (BDN), Bank Negara Indonesia (BNI), Bank Pembangunan Indonesia (Bapindo), Bank Bumi Daya (BBD), Bank Ekspor Impor Indonesia and Bank Rakyat Indonesia (BRI).
The seven banks control around 50 percent of the country's lending market.
Bogus exports
At the hearing, which was also attended by other members of Bank Indonesia's executive board, Soedradjad discounted the significance of the widely published issue concerning bogus export documents used to obtain the central bank's special rediscount facility.
"There is no state loss in this case. It is not even a big problem," he told the House members in his response to questions of bogus export documents.
A number of state and private banks were earlier reported to have colluded with a textile manufacturer in raising the central bank's rediscount facility, a subsidized loan facility given to exporters. The alleged textile manufacturer was reported to have supplied the banks with fake export documents to enable them to get the cheap funds. For the service, the manufacturer received a fee of between two and three percent from the banks.
Soedradjad said that the loan facility, which carried a low interest rate, could have been misused by certain banks to raise the inexpensive funds to support their financing.
"But for sure, we have to wait for the court's decision to determine whether some of the rediscount facility has been manipulated," he said while denying that his statement was meant to cover up the so-called bogus export document case.
Kim Johanes, the textile manufacturer, was recently banned from traveling overseas by the Attorney General for his alleged involvement in the use of bogus export documents. The case is now being examined. (hen)