OJK Asks Banks To Do This To Maintain NPLs When Reducing RWA

Deputy Commissioner for Banking Supervision II of the Financial Services Authority (OJK) Bambang Widjanarko. (Photo: Capture the OJK screen)

JAKARTA - Deputy Commissioner for Banking Supervision II of the Financial Services Authority (OJK) Bambang Widjanarko said that his party prepared a special strategy for banks to maintain the ratio of Non-Performing Loans (NPL) when implementing a Risk-Weighted Asset (RWA) policy of up to 100 percent.

"We encourage banks and finance companies to be selective and careful so as not to cause problems on the NPL sides", he said in a webinar Friday, 26 Fabruari.

Bambang added that the measure to adjust the RWA is aimed at providing flexibility for prospective borrowers to obtain credit in the midst of efforts to recover the national economy.

"OJK has also issued a further stimulus policy to boost growth through the financial services sector. "The temporary relaxation of prudential policies in the financial services sector is expected to encourage faster credit growth by taking into account the idiosyncratic element in the financial services sector", he said.

To note, the policy of restructuring bank credit and finance companies is also ongoing and until February 8, 2021, bank credit restructuring has reached IDR 987.48 trillion from 7.94 million debtors.

The MSME sector reached 6.15 million debtors with a value of IDR 388.33 trillion. Meanwhile, non-MSMEs reached 1.79 million debtors with a value of IDR 599.15 trillion.

The restructuring of the finance company until February 8 had reached IDR 193.5 trillion for the 5.04 million contracts approved.

Meanwhile, the risk profile of banking institutions as of January 2021 is said by the authorities to be still maintained with a gross NPL ratio of 3.17 percent (net NPL: 1.03 percent). Meanwhile, the NPF ratio of finance companies is 3.9 percent.

"OJK is strongly committed to supporting programs to accelerate national economic recovery and has issued a measured and timely follow-up stimulus policy to maintain the momentum of national economic recovery", said Bambang.

In its application in the field, the reduction in RWA means providing space for finance companies and banks to meet certain health level criteria to provide DP of 0 percent for motor vehicle financing.