D

espite recent weakening growth in bank lending, personal loans have now become easier to obtain with more products offered by a wide range of leading lenders.

Simpler and quicker personal loans are available for those looking for financial assistance from banks.

Though it has declined significantly following a ban by the Financial Services Authority (OJK) in June, mobile marketing messages via SMS offering non-collateral loans, popularly known as KTA, are still being received by many people in Indonesia. This, at least, shows that personal loans are still in demand.

Sometimes, agents offering the KTA directly call mobile phone owners, who mostly are credit-card holders. Just a few days ago I received a call from an agent claiming to be a representative of ANZ Bank.

From a mobile phone number, the agent said that ANZ was offering me a non-collateral loan of up to Rp 250 million (US$21,000). It was odd as several months ago the same bank had declined my loan request as I never answered my home phone number when contacted and I did not have a regular payroll check.

The agent said there were other KTA plans including Rp 50 million-Rp 100 million with a monthly interest rate of 1.5 percent and under Rp 50 million with an interest rate of 1.6 percent per month.

According to the agent, with a flat interest rate of 1.4 percent per month, I could get one third of the Rp 250-million loan disbursed three days after approval, with the remainder to follow in two disbursements.

Just a few hours later, another agent from BII called me. This time I was offered a KTA called Xcash of some Rp18 million with tenure options of 3-24 months and a monthly 0.99-percent interest rate. The agent suggested the KTA interest rate was much lower than the regular monthly rates of 1.49 percent or 1.67 percent offered by the bank.

There must be a lot of other people in Jakarta and cities across the archipelago who have received similar calls offering KTA.

Many people are indeed in need of personal loans and they should perhaps be grateful to the banks for such non-collateral loans. People now don't need to put their property or other valuables up as security when they need loans from banks.

Bank Indonesia (BI) says loan growth in July reached 17 percent which was in-line with its projection. Realization of credit per July 2014 stood at Rp 3.56 trillion. BI Governor Agus Martowardojo has predicted that loan growth in the country's banking industry will stand at 15 percent to 17 percent this year, in line with targeted general economic indicators. The central bank has also projected Indonesia will see a growth of 5.1 percent-5.5 percent in 2014.

Though there is concern about a possible downward trend, policy makers and some economic analysts still believe that the credit growth in the second half of 2014 will be stronger.

Big lenders in Indonesia continue to promote their loan products, including KTA. Spurred by the developing interest in personal loans, overseas, state-owned and private banks are saturating the market by providing various personal loans. Therefore it is sometimes hard to compare and determine the good and bad loans on offer.

Generally, loan providers ensure that consumers can get up to Rp 500 million and even Rp 1 billion of private credit just less in a week. There are also personal loan deals in smaller amounts of between Rp 10 million and Rp 50 million, which appear with specific terms and conditions.

 Those facing cash-flow difficulties have now a range of options to alleviate their financial distress.

Potential borrowers have the OJK and the Business Competition Supervisory Commission (KPPU) to thank for having signed an agreement to strengthen antimonopoly business practices and fair competition in the finance sector.

With such an agreement, which aims among other things to stabilize the finance sector and promote efficiency and innovation, there will no more worries about cartels in personal-loan interest rates given the fact that around 70 percent of the finance sector market share in Indonesia is dominated by 16 large banks.

Nonetheless, amid this promising landscaping people need adequate information to ensure they get what they really need. To understand the financial loans with the best plans and conditions, consumers should make comparisons among lenders.

Also, just like the first thing banks consider when they look at potential loans; whether they are going to get repaid, prospective borrowers should also think about their ability to repay, otherwise debt collectors will end up calling.

(I. Christianto)