As the rampaging COVID-19 pandemic continues to disrupt – and even paralyze – Indonesia’s economy and adversely affect financial stability, it has (or will) eventually taken a toll on the banking industry. The soaring number of non-performing loans or restructured loans would have negatively impacted banks’ cash inflows, triggering the pressing concern of the banks’ liquidity, and in turn, the banks’ financial soundness. While large banks may find a way to withstand the COVID-19 storm, small and medium-sized banks might find it harder to do so. The government reacted rightly and quickly – in less than a month after it confirmed the first COVID-19 positive case – by issuing Regulation in Lieu of Law (Perppu) No. 1/2020 on state finances and the stability of the financial system policies for the mitigation of the COVID-19 pandemic and/or t...

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