Listed firms get lending privilege from central bank
JAKARTA (JP): Bank Indonesia, the central bank, yesterday announced a new policy giving loan privileges to publicly listed companies and raising the required capital of foreign exchange banks.
The central bank said in a statement that a company whose ownership, organization or finance is related to other firms is now regarded as an independent enterprise -- instead of belonging to a group of firms -- which can raise a loan from a bank by up to 20 percent of the bank's capital if more than 30 percent of its shares are listed on the capital market.
"This privilege is aimed at encouraging companies to list more shares on the capital market," the statement read.
According to regulations on legal lending limits, loans for an individual company are limited to a maximum of 20 percent of a bank's capital and those for a group of companies also at a maximum of 20 percent of the capital.
Yesterday's statement explained that a company falls under the criteria of a group if 35 percent or more of its shares are owned by another company, an individual or jointly by a family; if it controls at least 35 percent of the shares of another company; if a member of the company's board of commissioners or directors is an executive at another company; or if there are financial links which give another company control of its operation.
The criteria, however, will be ineffectual if the amount of shares floated by a company on the stock exchange falls to or below 30 percent, or if a number of its shares are purchased by another company of its group, resulting in public ownership to become less than 30 percent.
Foreign exchange
The statement also announced yesterday that non-foreign exchange banks could now operate as foreign exchange banks only after owning a paid-up capital of at least Rp 150 billion (US$66.75 million), up from the previous minimum requirement of Rp 50 billion.
Non-foreign exchange banks should also demonstrate that they have been healthy for the last 24 months; that the ratio of their loans against risk-weighted assets (capital adequacy ratio) has reached 10 percent in the last month; and that they have prepared the necessary adjustments of management to conduct foreign exchange activities.
According to the statement, the new requirement is expected to encourage banks to merge, strengthen their capital structure and step up efficiency which, in turn, will enable them to face fiercer competition in the future.
The statement said that a non-foreign exchange bank which cannot meet the Rp 150 billion paid-up capital requirement can improve its status as a foreign exchange one if it merges with two other similar banks, operated healthily in the past 24 months, has a capital adequacy ratio of no less than 10 percent and has prepared management facilities necessary for foreign exchange operations.
Meanwhile, foreign exchange banks, including joint ventures, which are already operating, should now adjust their capital adequacy ratios.
Foreign exchange banks with a paid-up capital of no less than Rp 150 billion should have a minimum capital adequacy ratio of nine percent after two years, 10 percent after four years and 12 percent after six years.
Similar requirements must also be met by foreign exchange banks which have a paid-up capital of less than Rp 150 billion and have merged with other foreign exchange banks or non-foreign exchange banks.
After six years, all foreign exchange banks must have a minimum capital adequacy ratio of 12 percent and a paid-up capital of Rp 150 billion. (pwn)