BI to issue regulations pushing banks to lend

The central bank plans to issue regulations next year to push banks channeling loans as lending remains slow this year despite the fact that the economy has grown well, its governor said Monday.

"For those (banks) that do not perform their intermediary functions well, there will be disincentives. There will be regulations next year," Bank Indonesia (BI) acting governor Darmin Nasution told reporters after a meeting with the House of Representatives' commission XI overseeing financial affairs on BI's annual budget.

"We will begin to find and track incentives and disincentives for banks," he said.

BI director of banking research and regulation Halim Alamsyah said lending would have slow growth this year of between 5 percent and 7 percent. Lending grew by below 30 percent last year.

BI expected lending would increase to between 15 percent and 17 percent next year as the economy began recovery. The economy might expand between 5 percent and 5.5 percent next year, BI said.