Home Correctional service Growing risks of bank lending in the context of the pandemic – Opinion

Growing risks of bank lending in the context of the pandemic – Opinion


Harry Pattikawa (The Jakarta Post)


Rotterdam, The Netherlands ●
Thu 21 October 2021

The Bank of Indonesia (BI) and the Indonesian Financial Services Authority (OJK) are actively working hand in hand to save the national economy from the health crisis caused by COVID-19.

BI has increased the regulation of the loan to value (LTV) ratio from 80 to 90% to 100%. The LTV is the ratio of the total loan amount to the value of the assets financed by that loan. 100 percent LTV indicates that no equity is required. This regulation is valid from March to December. In addition, a 100% LTV is granted to banks with nonperforming loans (NPLs) of less than 5% of total loans. This LTV policy is only limited to the real estate and automotive sectors.

Regarding the NPL criterion mentioned, the OJK simultaneously relaxed the regulations on the classification of NPLs by taking out loans restructured from the classification. The regulations are valid until March 2022.

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