Loose Loans Due To Rising Interest Rates? Calm Down, BI Prepares This Incentive For National Banking

Illustration (Photo: Doc. Antara)

JAKARTA - Bank Indonesia (BI) has prepared a strategy to continue to encourage bank credit in the midst of the recent increase in benchmark interest rates.

BI Governor Perry Warjiyo said his party implemented an incentive policy for banks that channeled credit/financing to priority sectors and MSMEs or could meet the Macroprudential Inclusive Financing Ratio (RPIM) target effective September 1, 2022.

"Increase the amount of incentives for priority sectors to a maximum of 1.5 percent from the previous maximum of 0.5 percent, and the incentive for achieving RPIM remains at most 0.5 percent," he said as quoted on Wednesday, August 24.

In addition, Perry also conveyed the expansion of the priority sub-sector coverage from 38 priority sub-sectors to 46 priority sub-sectors.

"Bank Indonesia will continue to encourage credit/financing to businesses in priority sectors to support economic growth, exports, and economic and financial inclusion," he said.

For information, credit growth in July 2022 was recorded at 10.7 percent year on year (yoy), supported by increases in all types of credit and in most economic sectors.

Perry said that the intermediation recovery also occurred in Islamic banking with financing growth of 15.2 percent.

"From the supply side, the continued improvement in intermediation is supported by the standard of bank lending that remains loose, especially in the industrial, agricultural, and trade sectors in line with improving appetite for lending," he said.

Then, from the demand side, the increase in intermediation was supported by the continued recovery in corporate performance, reflected in sales and capital expenditures which continued to grow at high levels, especially in the agriculture, mining, industry, and trade sectors.

"Household consumption and investment are improving in line with increased mobility and consumer optimism, which also supports the increase in demand for bank credit," concluded Perry.