Bankers, bad loans scrutinized

JAKARTA (JP): Minister of Finance Mar'ie Muhammad vowed yesterday to bring directors and staff of state banks to court if there is any indication that they colluded with businesspeople to extend credit which latter soured.

"If the new bad loans resulted from collusions between bank directors or staff and businessmen, we will resolve it according to the law like we did with Eddy Tansil," Mar'ie told journalists after attending a deliberation over the capital market bill at the House of Representatives.

Eddy Tansil, the boss of the Golden Key Group, and a number of executives at the state-owned Bank Pembangunan Indonesia (Bapindo) were imprisoned after being convicted of corruption involving more than US$430 million in unpaid debts to the state bank.

Mar'ie's statement was made in relation to the sudden increase in bad loans at seven state banks during the April to June period. Bad loans totaled Rp 7.31 trillion (US$3.1 billion) last June, up from Rp 7 trillion in April.

The seven state banks are Bank Bumi Daya, Bank Dagang Negara, Bank Ekspor Impor Indonesia, Bank Negara Indonesia, Bapindo, Bank Rakyat Indonesia and Bank Tabungan Negara.

"However, we should not be trapped by the past. While we move toward the future, we can deal with the problems (of bad loans). At least the condition should not worsen," Mar'ie said.

Hard work

The minister assured that the Ministry of Finance and Bank Indonesia, the central bank, are working together to solve the bad loan problem. He said it was very hard work.

He noted that problem loans occur not only in developing countries like Indonesia, but also in developed countries like Japan. "It's not an apology if I said that Japan is facing similar problems, which are not lighter than what Indonesia is facing right now."

At a hearing with the House of Representatives' Budgetary Commission on Thursday, Bank Indonesia Governor J. Soedradjad Djiwandono disclosed that bad loans totaling Rp 7.31 trillion at the seven state banks accounted for 73 percent of the total bad loans of Rp 9.97 trillion at all of the country's commercial banks, or 4.16 percent of the outstanding credit as of June.

Soedradjad said that despite the increase of state banks' bad loans, domestic private commercial banks had reduced their problem loan exposure to Rp 1.66 trillion as of June from Rp 1.79 trillion in April.

Soedradjad, however, didn't give a reason for the increase in problem loans at state banks. He only said that the necessary action had been taken by Bank Indonesia to solve the bad loans and prevent future problem loans.

Bank Negara Indonesia President Winarto Soemarto was quoted by Antara as saying the increase in bad loans at state banks may have been caused by unpaid interest loans. They are automatically included as bad loans after being in arrears for three months.

Winarto said there is a very small possibility of new bad loans emerging at state banks because they are now equipped with "action plans" from their lender, the World Bank.

"The amount and percentage of bad loans at state banks should decrease if they execute the World Bank's action plans according to schedule," Winarto said. (rid)

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