BI EASE THE RESTRICTION UPON BANK’S LOAN DEPOSITO RATIO
Posted on August 21, 2015 on 15:40:24 WIB
Bank Indonesia (BI) will publish BI Regulation (PBI) related incentives, easing limits on loan to deposit ratio (LDR) for banks that have fulfilled the obligations lending to micro, small, and medium enterprises (SMEs). PBI will also include the expansion of the scope of the definition of deposits in the calculation of the LDR and will be released in May.
Executive Director of the Department of Communication BI Tirta Segara said, in order to encourage the growth of credit in the range of 15-17% this year, BI immediately communicate macroprudential policy more accommodative. The policy easing in the form of incentives upper limit LDR for banks that have fulfilled obligations SME lending.
In addition, expanded coverage of the definition of deposits to include securities issued by the bank in the calculation of the policy reserve-LDR LDR (Statutory-Loan to Deposit Ratio). "The rule is almost completed. The second rule will be one of PBI and published next month, "said Tirta in Jakarta, Tuesday (14/4).
Although the rule is released next month, according to Tirta, the application of the rules of the regulation will not apply when published. However, in order to increase liquidity in the banking, the rule is certainly published this year.
Currently, according to Tirta, bank liquidity is adequate with the LDR in February 2015 at the level of 88%. LDR is supported by the growth of third party funds (DPK) in Feburary of 15.2% year on year (yoy), up from the previous month which grew 14.2% (yoy). While credit growth in February stood at 12.2 (yoy), up from the previous month which grew 11.5% (yoy).
The capital adequacy ratio of banks in February 2015 stood at 21.3%, well above the capital requirement of 8%. Meanwhile, the ratio of non-performing loans amounted to (non-performing loans / NPL) was relatively low at 2%. This year, according to Tirta, third-party funds (DPK) is expected to grow in the range of 14-16%, and 15-17% credit growth.
Currently, the central bank set the upper limit of the LDR-GWM of 92%, and a lower limit of 78%. In addition to providing incentives in the form of easing the LDR limit, BI had also planned to provide additional incentives for bank current accounts that already comply with the SME loan portfolio over the beginning.
Based on Bank Indonesia Regulation (PBI) No. 14/22 / PBI / 2012 on Lending Or Financing by Commercial Banks and Technical Assistance in the Context of Development of Micro, Small, and Medium Enterprises, banks are required to distribute SME loans amounting to 20% of total loans distributed in stages until 2018. The rules are explained, banks are required to extend credit to the SME sector a minimum of 5% at the end of 2015, and by 10% in 2016, 15% in 2017, and 20% in 2018.
Meanwhile, Head of the Division of Economic and Banking System Risk Insurance Agency (LPS) Arifianto Dody said, the impact of expansion or easing policy LDR does not necessarily have a significant impact on the liquidity of the banks this year.
The rules are likely to have a significant impact on the liquidity in the next 2-3 years, after adjusting market. "When it comes to the new rules, banks will certainly learn in advance, such as what and impact, so it will not be felt immediately this year," he said.
Currently, according to Dody, the costs of banks to seek financing through bonds relatively more expensive than if the bank looking for funding through deposits. In order to encourage lower bond costs required in the bond market. "To encourage a deeper bond market it certainly takes time, so the impact is to decrease the cost of banking funds requires a relatively long time," he explained.