OJK to Revise Loan Growth Target

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  • A logo of the Financial Services Authority (OJK). TEMPO/Tony Hartawan

    A logo of the Financial Services Authority (OJK). TEMPO/Tony Hartawan

    TEMPO.CO, Jakarta - Chief commissioner-elect of the Financial Service Authority (OJK) Wimboh Santoso said the agency may revise loan growth target for this year.
    According to him, the target of 12 percent relies heavily on the real sector. "There should be economic activities. An intervention is need? As far as OJK concerned, [the process of obtaining] permits must be expedited to create demand," he said last week.

    Wimboh, who will be taking office in July, said that aside from real sector, several aspects need to be taken into consideration to reach double-digit growth. Capital strength of banks must be mapped because it will become the pillar of proportional liquidity.

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    Wimboh said that the mapping will create good risk mitigation policies. As such, the three aspects will determine the achievement of the target. "If we insist but there was no demand, it would be a disaster."

    Earlier, Deputy Governor of Bank Indonesia Erwin Rijanto said in May that loan growth had reached 9.8 percent.

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    To achieve the targeted 12 percent, according to Erwin, the government need to ease the process to obtain permits and provide incentives to attract more private investment. Moreover, ratings agency Standard & Poor's upgrade last month will help bring more investment. Bank Indonesia has to be wary of monetary risks amid uncertainty in global economy.

    Loan growth would allow people to receive higher term deposit interest rates from bank, which is expected to attract more people to save their money in banks. State-owned lender Bank Mandiri Kartika Wirjoatmodjo, however, said he will await whether a significant loan growth would materialize before raising term deposit interest rates.

    However, non-performing loans (NPL) still overshadows banks. As of late March, bank NPL stood at 3.04 percent. It shows that corporate performance has not fully recovered yet.