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AKARTA: The new regulation on minimum down payment for automotive and housing loans will safeguard banks and financing companies from risks of bad loans, though it will affect credit growth and earnings, ratings agency Moody’s Investors Service says.

“These new regulations, the first of their kind in Indonesia, are credit positive, as they will enforce more prudent lending and counteract lending practices that we believe banks and finance companies have relaxed over the past five years,” Moody’s said in an emailed statement sent on Monday.

Bank and non-bank financing companies watchdogs Bank Indonesia (BI) and Bapepam-LK have required a 20 to 30 percent down payment on motorcycle, car and housing loans to prevent bubble and avoid non-performing loans (NPL) in the sectors.

Vehicle and housing loan segments saw a strong annual growth rate of 125 percent during 2008 to 2011, undermining banks’ asset quality, Moody’s said. Nine banks will benefit from the new regime, it added, especially for Bank Danamon and Bank Tabungan Negara (BTN), which have the highest exposure.

“This initiative is unlikely to affect growth and earnings of banks with a smaller percentage of motor vehicle and housing loans, such as Bank Mandiri and Bank Rakyat Indonesia [BRI] and those reputed to be conservative in loan underwriting, such as Bank Central Asia [BCA],” the statement reads.