Bankers appoint team to cope with problem loans
JAKARTA (JP): The Domestic Private Banks Association (Perbanas) ended its two-day congress here last night with a strong commitment to helping its members cope with non-performing loans through its newly established consultative team.
"All members unanimously greeted the establishment of the new team, which is designed to provide consultative services on problem loans for its members," the association's chairman, Trenggono Purwosuprodjo, told reporters after the closing ceremony of the congress.
He said the team will cooperate with all related government agencies, including the Ministry of Justice, the Office of the Attorney General, the State Receivership Agency, the National Land Agency and Bank Indonesia, the central bank, to help settle problem loans faced by private commercial banks, he said.
"We recommended that the team have lawyers and other experts in banking and economics," he said.
Last night's congress reappointed Trenggono and I Nyoman Moena as Perbanas' chairman and head of supervisory council, respectively. It appointed the former secretary general Thomas Suyatno as new vice chairman and Muchtar Mandala, a former president of Bank Bukopin, as secretary general. The 12th assembly, which was opened by President Soeharto on Thursday and closed by a central bank director, Hendrobudiyanto, also established a new committee for studies and development, which will support the team in dealing with problem loans.
"Our decision on the establishment of the team reflects our commitment to improve the banking industry in the country, which has been rocked by uncertainties recently," Trenggono said.
The Indonesian banking industry was recently sparked by a number of non-performing loans.
Cases
Thomas told The Jakarta Post there are at least 300 cases of bad loans, 225 of which will be executed soon.
He noted that by the end 1993, bad loans of 156 private banks were estimated to reach Rp 1.5 trillion (US$697.02 million) or 2.7 percent of the total loans provided by the banks.
Minister of Finance Mar'ie Muhammad recently reported that the bad loans at the seven state banks jumped by 360 percent within the past three years to over Rp 14.97 trillion, reflecting 21 percent of their outstanding loans as of last October.
Most of participants saw that non-performing loans at private banks to have been caused primarily by mismanagement, including the ignorance of prudential principles of banking operation.
Timoty E. Marnandus, the new secretary of Perbanas's supervisory council, told the Post that ignorance of business ethics was partly to blame for the banking tragedy.
At the opening of the congress, President Soeharto urged bankers, whose industry has been rocked by a multi-million dollar credit scam, to make a concerted effort to improve internal supervision and management to prevent making bad loans.
Soeharto said that officials from the Ministry of Justice, the Office of the Attorney General, the National Land Agency, the State Receivership Agency and monetary authorities should also cooperate to seek fair and swift ways to legally settle non- performing loan cases faced by the banking industry.
Thomas said that the congress, considering the President's instructions to improve the banking industry, also decided to put a high priority to promote credit expansion.
Perbanas is optimistic to reach this year's national target of an 18 percent increase in credit expansion for businesses. Twenty percent of the credit expansion will be allocated for small-scale businesses.
The association will cooperate with secondary banks and various financial institutions throughout the country to promote the expansion of credits for small entrepreneurs.(fhp/icn)