Bankers Urge BI to Relax Credit Regulation
Friday, 12 January, 2007 | 12:58 WIB

Tempo Interactive, Jakarta: Bankers are advising that Bank Indonesia (BI) relax the regulation on credit disbursement to the real sector. With this disbursement, the real sector, that so far has been stagnant, can grow in the future.

Corporate Director of PT Bank Mandiri Abdul Rachman said that banks were actually interested in not expanding credit, moreover to disburse credit to losing companies. Losing companies, he said, were still being disbursed banking credit as long as their cash flow was good so that they were still capable of repaying debts in installments. “You can see PT PLN or some other companies. They still have good cash flow,” he told Tempo yesterday (01/11) in Jakarta.

The problem was that, he said, banks did not dare to disburse credit to losing companies. They were concerned that the central bank will instead decrease the credit collectibile rate should it finance losing companies. “Banks must set out provisions if Bank Indonesia decreases the collectibile rate,” he said.

“The provisions will increase the company's operational costs. Despite the banks having granted credit facilities, they were being downgraded,” he said.

The State-Owned Enterprises State Minister Sugiharto was surprised. The obligations of PLN (state electricity company) were sold easily. “However, PLN faced difficulties in gaining funds from domestic banking,” he said.

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