Government urged to take action against bad loans
Government urged to take action against bad loans
JAKARTA (JP): Banking analysts have again urged the government
to do something about banks' "unacceptable levels" of bad loans.
I. Nyoman Moena, a supervisor from the Federation of
Indonesian National Private Banks (Perbanas), said Tuesday the
bad loans, which totaled Rp 10.34 trillion (US$4.4 billion) at
the end of August or around 3.4 percent of outstanding credits,
exceeded an acceptable 3 percent level.
"The acceptable level of bad loans is 3 percent of total
credits." he said. "If bad loans exceed the tolerable limit,
banking activities can be adversely affected."
If the government does not solve the bad loan problem
immediately it could worsen, Moena said at the sidelines of a
banking seminar organized by STIE Perbanas, the federation's
school of economics.
"You must seek a quick solution. Otherwise, the growth target
of 7 percent per annum in the current development plan is
unachievable," he said.
Bank Indonesia Governor J. Soedradjad Djiwandono said last
week that banks' bad loans at the end of August totaled Rp 10.34
trillion, or 3.4 percent of their total credits.
The seven state banks had bad loans of Rp 7.07 trillion or
about 70 percent of all domestic bad loans.
The state banks' bad loans had increased from Rp 6.39 trillion
at the end of last December, according to the central bank.
The bad loans at state banks -- Bank Negara Indonesia 1946
(BNI), Bank Pembangunan Indonesia (Bapindo), Bank Bumi Daya, Bank
Rakyat Indonesia, Bank Dagang Negara, Bank Ekspor Impor Indonesia
and Bank Tabungan Negara -- accounted for 2.33 percent of their
total outstanding credits, down from 3.39 percent at the end of
last December.
Speaking at a hearing with the House of Representatives'
budgetary commission, the central bank governor said national
private banks had bad loans of Rp 2.19 trillion, up from Rp 1.43
trillion at the end of last December.
Thomas Suyatno, a bank federation executive and House member,
described the bad loans as "very worrisome".
"We hope the government will soon find an appropriate solution
to deal with the non-performing loans," he said.
The central bank formed a special team two years ago to settle
the state banks' bad loans. But the team, comprising senior
officials of the central bank and state banks, has been widely
criticized for working too slowly.
Thomas suggested the team be expanded to include senior
officials from the Ministry of Justice, Supreme Court, Attorney
General's Office, police, Agrarian Agency, Ministry of Finance
and other agencies.
The bigger team would be more objective in its solutions, said
Thomas, also the rector of Jakarta's Catholic Atmajaya
University.
The best solution is to reschedule the bad loans, he said.
Borrowers should be sued if they can no longer service and
repay their loans, he said. (hen)