Indonesia has initiated the restructuring program to cushion the impact of economic downturn. About 39.3 percent of the restructured loans cover small businesses.
he country's loan restructuring program has reached nearly Rp 1 quadrillion (US$70.5 billion) as borrowers reel from economic downturn during the pandemic.
The Financial Services Authority (OJK) reported Friday the amount of restructured loans was recorded at Rp 987.48 trillion as of Feb. 8, involving 101 banks. Some 39.3 percent are from 6.15 million small business borrowers and the rest is from 1.79 million other borrowers.
The loan restructuring program has led to increases in the loan-at-risk ratio (LAR) to 23.38 percent in December last year, up from 9.93 percent in December 2019.
“This means that we know many borrowers have been affected by the pandemic, so they have to restructure and thus show up in the LAR,” Bambang Widjanarko, the deputy commissioner of banking supervision II at the OJK, said in a virtual briefing.
“If we look at the trend, it has plateaued,” Bambang added. “After it was launched in March, the restructuring surged in April. Then it started plateauing in October. There appears to not be much right now.”
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The OJK issued the regulation for the loan restructuring program in March last year to provide relief for borrowers impacted by the COVID-19 pandemic by relaxing debt quality assessments and restructuring requirements for loans worth up to Rp 10 billion. The authority is extending the program to March next year.
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