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Jakarta Post

LTV relaxation may help boost consumer spending

Jakarta   /   Tue, November 7, 2017   /  08:19 am
LTV relaxation may help boost consumer spending Lower down payments can motivate borrowers to use bank loans to buy more than one house. (Shutterstock/File)

The banking industry continues to face difficulties in increasing loan disbursement despite the low interest rate environment. A slight increase in lending growth to 8.4 percent in August from 7.9 percent in the previous month is relatively low amid stagnant consumer spending and sluggish business activity. Households have tended to tighten spending, while companies have mostly delayed their expansions, both seemingly preferring to keep their funds in banks. The growth of third-party funds reached 9.4 percent yearon-year (yoy) in August on the back of a significant increase in savings and time deposits. It is easier for banks to raise public funds, rather than disbursing them into productive loans in the real sector. The low lending growth is also partly due to relatively higher non-performing loans (NPL) in the country’s banking industry. Many banks’ NPLs are higher th...

Disclaimer: The opinions expressed in this article are those of the author and do not reflect the official stance of The Jakarta Post.