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Industries ask OJK for one more year to restructure loans
Several industries have called for at least another year's extension after the OJK announced a March 2024 termination date to its pandemic-era loan restructuring facility, arguing that a one-size-fits-all approach will not work.
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A worker arranges rolls of fabric on April 16, 2020 at Cipadu Market in Tangerang, Banten. (Antara/Fauzan)
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ndustry associations have asked for a one-year extension of a special loan restructuring program, saying it is too early to end the program, because some businesses have not fully recovered to pre-coronavirus levels and are facing new challenges.
The Financial Services Authority (OJK) announced earlier this week that the loan restructuring program it introduced in 2020 to keep local businesses afloat during the COVID-19 pandemic would end next March.
Industry representatives asked that the program, which had been extended several times, be extended to at least March 2025.
At a press briefing on Monday, the OJK reiterated its decision to terminate the program, highlighting that Indonesia was the only country in the world with an active COVID-era loan assistance program.
The authority also noted that, by and large, local businesses had gotten back on their feet, as reflected in a downtrend as of October to Rp 301 trillion (US$19.37 billion) in the total amount of loans that still need restructuring, which fell to Rp 301 trillion in of October.
The program affords struggling debtors a tenor extension or interest rate reduction. It also allows banks to reclassify those loans as "loans at risk" (LaR), helping banks keep their nonperforming loan (NPL) ratios artificially low.
Dian Ediana Rae, the OJK’s head of banking supervision, said the banking sector would not be shaken once the program ended.
