Bank Indonesia Is Optimistic That Lending Will Continue In The Second Quarter Of 2021

Illustration. (Photo: Doc. Antara)

JAKARTA - Bank Indonesia (BI) estimates that new credit disbursement will increase in the second quarter of 2021. The head of the BI Communication Department Erwin Haryono expressed his optimism today.

According to him, the weighted net balance (SBT) of new credit disbursement amounted to 93.3 percent, an increase from 30.4 percent in the first quarter of 2021. This increase will be driven by consumption credit, followed by working capital credit and investment credit.

"The standard for lending in the second quarter of 2021 is predicted to be less stringent than the previous period," he said, Wednesday, April 21.

Erwin added, this condition was indicated by the Lending Standard Index (ILS) of 2.8 percent, or slightly lower than the 4.0 percent in the previous quarter.

"Aspects of disbursement policies that are not predicted to be as strict as in the previous quarter include risky credit premiums, collateral, and administrative requirements," he said.

For information, this projection is obtained based on the results of a survey conducted by the monetary authority. It was stated that respondents remained optimistic about credit growth for the entire 2021 period.

“Respondents predict credit growth in 2021 of 6.0 percent year-on-year (yoy). This optimism was driven, among others, by monetary and economic conditions, as well as the relatively manageable risk of lending, "explained Erwin.

Previously, BI Governor Perry Warjiyo appreciated the steps of state-owned banks which were quite responsive in transmitting interest rate reduction policies, especially on the credit side.

In Perry's notes, the reduction in the prime lending rate (SBDK) of state-owned banks by mid-April was 266 basis points (bps) yoy to 8.70 percent.

"The low monetary policy interest rate and loose liquidity have pushed interest rates down," said the BI governor during a virtual press release, Tuesday, April 20.

For information, the central bank has taken a stance to maintain the BI 7-Day Reverse Repo Rate (BI7DRR) at 3.50 percent. This is at the same time extending the interest rate to the lowest level with one of the objectives is to encourage lending to the public.