OJK Announces End of COVID-19 Banking Credit Relaxation
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1 April 2024 05:41 WIB
TEMPO.CO, Jakarta - The Financial Services Authority (OJK) announced on Sunday that the banking credit relaxation stimulus, which was provided to ease the impact of the COVID-19 pandemic, has ended on March 31, 2024.
“The end of the policy is in line with the revocation of the COVID-19 pandemic status by the government in June 2023,” Chair of the OJK Board of Commissioners Mahendra Siregar said on Sunday, March 31, 2024.
Apart from that, he said, the policy has been ended by taking into account Indonesia’s economic condition which has recovered from the impact of the pandemic.
The OJK assessed that Indonesia’s banking sector currently has a strong resilience in facing the economic dynamics, supported by strong capital, sufficient liquidity, and good risk management.
To this end, the banking sector is deemed ready to face the end of the COVID-19 credit relaxation policy.
This is also supported by the continuing economic recovery with an inflation rate that is under control and investment that is growing.
In line with the revocation of the COVID-19 pandemic status in Indonesia in June 2023, the community’s economic activities continue to grow.
The credit relaxation policy, which took effect in early 2020, had been utilized by many debtors, especially micro, small, and medium enterprises (MSMEs).
The policy was part of the countercyclical policy and a landmark policy in supporting the performance of debtors, banking, and the economy in general to get through the pandemic period.
Various indicators in January 2024 showed that Indonesia’s banking sector was in good condition.
They include the Capital Adequacy Ratio (CAR) at 27.54 percent, Liquidity Coverage Ratio (LCR) at 231.14 percent, Non-Core Deposit (NCD) at 123.42 percent, and an adequate level of profitability.
“This is expected to be a solid cushion to mitigate risks amid the uncertain global economic conditions,” Siregar remarked.
Meanwhile, the credit quality has been maintained below the 5 percent threshold, with the gross nonperforming loan (NPL) at 2.35 percent and net NPL at 0.79 percent.
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