Banks asked to form debt restructuring unit
Banks asked to form debt restructuring unit
JAKARTA (JP): Indonesian banks are obliged to set up special
working units to restructure their non-performing loans before
Feb. 12, 1998, according to Bank Indonesia.
Detailing its November ruling on bank credit restructuring
guidelines, the central bank said the working units should be
staffed by people unconnected with decisions to issue the loans.
Muchlis Rasyid, deputy chairman of the Jakarta Initiative Task
Force on debt restructuring, who is in charge of restructuring
more than Rp 691 trillion in private sector debt owed to domestic
banks, explained the loan guidelines to bankers here on
Wednesday.
The guidelines stipulate that banks are allowed to provide
debtors with seven restructuring incentives, including lower
interest rates, a reduction of unpaid interest, debt relief,
payment extension, new financing facilities, debt-for-asset
swaps, and debt-for-equity swaps.
Banks also have limited scope to provide additional
restructuring incentives and are allowed to demand greater
protection for their loans.
However, Bank Indonesia has stated that only viable debtors
are eligible for the incentives because the main objective of the
restructuring process is to improve the business performance of
debtors and secure repayment of their debts.
Muchlis said that so far 57 companies with a combined debt of
Rp 15 trillion owed to domestic banks had sought to make use of
the restructuring incentives.
"Two companies have agreed restructuring deals," the former
managing director of Bank Indonesia told reporters after the
gathering.
Jakarta Initiative Task Force chairman Jusuf Anwar said last
month that the new ruling had been made to help banks enter into
restructuring deals.
"This should help to appease bankers' fears that they will be
accused of KKN if they offer to forgive or restructure debts owed
to them," he said.
KKN is an Indonesian acronym for corruption, collusion, and
nepotism.
Restructuring the country's banking sector is a key to the
recovery of the crisis-hit economy. (rei)