Land agency to help banks recover bad loans

JAKARTA (JP): State Minister for Agrarian Affairs Soni Harsono pledged here yesterday that he would help commercial banks recover non-performing loans in which land was used as collateral.

"So far there are a lot of cases of bad loans in which debtors are using their land as collateral. However, the land has legal flaws in their certificates," Soni, who is also chairman of the National Land Agency (BPN), told reporters here yesterday.

His announcement came after he attended a meeting of economic ministers.

President Soeharto said last Thursday that the Ministry of Justice, the Office of the Attorney General, the National Land Agency, the State Receivership Agency and monetary authorities should cooperate to seek fair and swift ways to legally settle non-performing loan cases faced by the banking industry.

According to Bank Indonesia (the central bank), bad debts from both state and private banks had reached some 3.5 percent of the outstanding loans as of last November, amounting to some Rp 145.9 trillion (US$57.7 billion.)

Soni said yesterday that BPN and the central bank had already met several times to discuss ways to solve the problems related to bad loans.

Ready

"We are now ready to help commercial banking," he said. He added that his agency is now taking measures to help the liquidation team of the now defunct Bank Summa recover the bank's bad loans.

He said that many plots of land which were put up for mortgage at Bank Summa were also put up at other banks as collateral.

Soni's statement is expected to relieve executives of private banks, which are encountering an increasing level of non- performing loans.

Perbanas has been committed to helping its members cope with non-performing loans through its newly established consultative team. The association's vice chairman, Thomas Sujatno, criticized the government, which so far has helped only state-owned banks in recovering bad loans.

"The government is very successful in executing bad loans at state-owned banks," he said. However, he added that private banks should actually be receiving similar attention.

Perbanas' chairman said over the weekend that the association's new team, comprising lawyers and experts in banking and economics, will cooperate with all related government agencies to help settle problem loans faced by private commercial banks.

These agencies will include the Ministry of Justice, the Office of the Attorney General, the State Receivership Agency, Bank Indonesia and BPN.(icn)