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Jakarta Post

[ANALYSIS] Loan expansion to support economic recovery

Funds at your fingertips: A teller of state-owned bank Mandiri tells his customer about productive micro credit that can be requested via a mobile app the bank launched in June 2020. (Antara/Nova Wahyudi)
Rully Arya Wisnubroto
Jakarta   ●   Wed, May 5 2021

The Indonesian banking industry has gone through one of the most challenging times since the monetary crisis in 1998/1999 and it is showing a healthy and stable condition. The capital adequacy ratio (CAR) continued to increase and liquidity remained ample, while the loan to deposit ratio remained at multi-year lows. Asset quality has been improving with nonperforming loans (NPL) relatively stable at 3.2 percent. Banks’ loans-at-risk have improved as the outstanding restructured loans impacted by the COVID-19 pandemic have decreased as some impacted debtors started to recover.

Monetary and fiscal policy have been very accommodative. The policy rate, Bank Indonesia’s (BI) seven-day reverse repo rate, is currently at a historic low of 3.5 percent. To ensure sufficient liquidity in the financial system, BI has provided as much as Rp 798.9 trillion (US$55.37 bill...

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