Bank Indonesia Strengthens Macroprudential Policy Stimulus To Encourage Banking Credit Growth

Governor of Bank Indonesia Perry Warjiyo. (Photo: Doc. ANTARA)

Bank Indonesia (BI) continues to strengthen its macroprudential policy stimulus to encourage credit growth or bank financing through the implementation of Macroprudential Liquidity Incentive Policy (KLM).

BI Governor Perry Warjiyo said he would encourage credit or bank financing growth through the implementation of KLM to priority sectors, including downstreaming (minerba, agriculture, plantations, and fisheries), housing (including public housing).

Furthermore, the tourism sector and the creative economy, MSMEs, KUR, Micro, and green for Conventional Commercial Banks (BUK) and Sharia Commercial Banks (BUS) or Sharia Business Units (UUS) will take effect on October 1, 2023.

Perry conveyed that the macroprudential policy was loose to encourage sustainable economic growth to be further strengthened by maintaining the Countercyclical Capital Buffer (CCyB) ratio of 0 percent and the Macroprudential Intermediation Ratio (RIM) in the range of 84 percent to 94 percent.

"Continuing the easing of the Loan to Value (LTV) or Financing to Value (FTV) ratio for loans or property financing to a maximum of 100 percent for all types of properties for banks that meet certain Non Performing Loan (NPL) or Non-Financing Financing (NPF) criteria, effective January 1 to December 31, 2024," he explained at the KSSK Press Conference in Jakarta, Friday, November 3.

Then, continue easing the provisions for down payment on credit or motor vehicle financing to at least 0 percent for all types of new motorized vehicles, to encourage credit growth in the automotive sector while still paying attention to the principles of prudence and risk management, effective January 1 to December 31, 2024.

Perry said that he would relax liquidity by reducing the Macroprudential Liquidity Supporting ratio (PLM) by 100 bps from 6 percent to 5 percent for Conventional Commercial Banks (BUK), with revo flexibility of 5 percent.

Furthermore, the ratio of sharia PLM is 100 bps from 4.5 percent to 3.5 percent for Islamic Commercial Banks or Sharia Business Units (BUS/UUS), with a repo flexibility of 3.5 percent.

"This decline is also aimed at providing flexibility in liquidity management by banks in lending or financing and encouraging financial market deepening, effective from December 1, 2023," he said.

Perry added that he would strengthen the deepening of the policy on the transparency of the Basic Credit Interest Rate (SBDK) with a focus on lending rates per economic sector.