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)