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)