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View all search resultsLoan restructuring extended until 2022
According to OJK data, as of Sept. 28, a total of Rp 904.3 trillion in loans to 7.5 million borrowers had been restructured.
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T
he Financial Services Authority (OJK) has announced that it will extend its loan restructuring program, issued to cushion the impact of the pandemic on the country’s borrowers and banks, until March 2022.
The OJK said it would finalize the policy extension in the form of an OJK Regulation (POJK) and would extend several other programs at the same time, including the exclusion of the loan-at-risk calculation when assessing a bank’s health.
“The extension of this restructuring program serves as an anticipatory step to provide support against the declining quality of borrowers seeking restructuring,” OJK chairman Wimboh Santoso said in a press release on Thursday.
“However, the restructuring extension policy has to be given selectively, based on the bank’s assessment, to avoid moral hazard so that borrowers still want and are able to carry out economic activities while adapting to the pandemic,” he added.
The loan restructuring program was established in March under POJK No. 11/2020 and was previously set to last until March 2021. The regulation relaxes debt quality assessments and restructuring requirements for loans worth up to Rp 10 billion (US$681,082) for borrowers affected by COVID-19.
The loans can be restructured by lowering interest rates, extending repayment periods, reducing principal or interest arrears, adding loan facilities, or converting loans into temporary equity participation schemes agreed upon by banks and their customers.
Banks are allowed to declare the restructured loans “good loans” despite their declining quality as a result of the pandemic and need not categorize them as non-performing loans (NPL) or set aside loan-loss provisions for them.
