OJK: MSME Credit Quality Will Be Maintained

Illustration. (Photo: Doc. Antara)

JAKARTA - Chief Executive of Banking Supervision of the Financial Services Authority (OJK) Dian Ediana Rae said the credit quality of micro, small and medium enterprises (MSMEs) will be maintained in the future.

This is shown by the ratio of credit risk or Loan at Risk (LAR) for MSME loans, which continues to experience a downward trend, which is 13.50 percent in June 2024 compared to May 2024 which was recorded at 13.83 percent, and was smaller than the previous year of 16.84 percent.

"This indicates that in the future the quality of MSME loans will be maintained and even improved, of course with the support of various parties," said OJK Banking Supervision Chief Executive Dian Ediana Rae in Jakarta, quoted from Antara, Monday, August 12.

Even the risk ratio of MSME loans was getting closer to the level before the COVID-19 pandemic, namely in December 2019 which was recorded at 12.74 percent.

Furthermore, MSME gross non-performing loans (NPL) in June 2024 amounted to 4.04 percent, recorded a decline compared to May 2024 of 4.27 percent, although it is still relatively an annual increase.

Dian said that in general, the risk of inherent MSME loans is indeed higher than corporate and household loans because the MSME business is more sensitive to changes in economic conditions and people's purchasing power.

In addition, MSME credit growth which experienced a slowdown compared to the same period the previous year, as well as the end of credit restructuring relaxation related to the COVID-19 pandemic, caused the MSME credit NPL ratio to increase.

However, the increase in NPL on MSME loans has been predictable and has been mitigated by banks through the establishment of sufficient reserves, so that the NPL MSME ratio rate is still included in the acceptable level.