he Financial Services Authority (OJK) considers Indonesian financial institutions to be in good shape and ready to disburse more loans to increase consumption and prevent economic slowdown.
OJK chief Muliaman Hadad said the authority was currently studying the possibility of allowing zero percent down payments to add to the central bank’s consumption-boosting incentives, as the risks were still manageable.
"The bank's non-performing loans [NPL] stood at 3.05 percent in July and the 5.18 percent growth in the economy in the first semester is a sign of recovery. More stimulus is needed to boost consumption," he told The Jakarta Post at Atma Jaya Catholic University in Jakarta on Monday.
The July NPL level was slightly down from 3.1 percent in June, and still far below the maximum tolerable level of 5 percent. If anything goes wrong, Muliaman added, the loan to value (LTV) rule can be changed again.
"Consumption in the property and automotive sectors is the leading economic indicator given its trickle-down effects for supporting industries," he said.
Bank Indonesia (BI) has previously announced plans to ease LTV and loan requirements such as down payments and collateral for property and automotive loans. BI deputy governor Perry Warjiyo said the new measures would be released this month. (ags)
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