New bank loans in August up 25 percent: BI
New bank loans in August up 25 percent: BI
The Jakarta Post, Jakarta
Bank Indonesia said on Wednesday that new bank loans increased by
25 percent, to Rp 9.5 trillion (US$1.07 billion) in August from
Rp 7.6 trillion in July.
The central bank said that the higher loans were made possible
because of a decline in domestic interest rates.
"Of the new loans, Rp 3.2 trillion was provided to small-scale
businesses," the central bank was quoted by Dow Jones as saying.
Bank Indonesia said that outstanding bank loans rose to Rp 369
trillion in August from Rp 357.4 trillion in July.
In comparison, outstanding bank time deposits and savings
increased to Rp 808 trillion from Rp 791 trillion in July.
New bank lending started to increase recently after it had
virtually come to a halt following the late 1990s financial
crisis.
The central bank has been guiding its benchmark interest rate
downward since the start of the year amid a diminishing
inflationary threat and stronger exchange rate of the rupiah.
The interest rate on one-month Bank Indonesia SBI promissory
notes has fallen to around 14.07 percent, from more than 17
percent at the beginning of the year. This has allowed banks to
cut their lending rates to about 18 percent, from more than 22
percent earlier this year.
But analysts said that despite the decline in domestic
interest rates and a higher new lending figure, the country's
corporate sector was still finding it difficult to obtain bank
borrowing for working capital.
Experts said that a sizable proportion of new bank loans was
mostly in the form of consumer loans.
Domestic banks, which are still struggling to recover from the
devastating financial crisis, are still less enthusiastic about
agreeing new loans to the corporate sector as the latter still
owes a huge amount in bad debts.
The revival of bank lending is a crucial element in efforts to
push for higher economic growth, which, this year is projected at
4 percent, and next at 5 percent.
Meanwhile, bankers said that the current lending rate of
around 18 percent was still deemed to be expensive by the
business sector.
"I think more lending could be channeled to the business
sector if the SBI rate falls below 14 percent," a senior banker
said.
Bank Indonesia said there was still more room for it to lower
further its benchmark interest rate toward the end of this year
on the back of lower inflation.
"For the coming months Bank Indonesia sees inflation
continuing to fall, the rupiah to strengthen and the money supply
to come under control. Therefore, Bank Indonesia see more scope
for easing monetary policy," the bank's board of governors said
in a statement.
At the Wednesday weekly, the interest rate of the one-month
SBI notes fell to 13.78 percent from 14.07 percent in the
previous week.