JAKARTA - The distribution of corporate loans by banks does not run smoothly. Even though the government hopes that credit distribution can revive the national economy in the midst of the COVID-19 pandemic. In fact, the government has even stepped in to increase liquidity in state-owned banks up to IDR 30 trillion.
Former Minister of Finance during the Susilo Bambang Yudhoyono (SBY) administration, Muhammad Chatib Basri, said that currently banks have absolutely no problems with liquidity. According to him, even if there are banks that experience this problem, it is not because of the impact of the COVID-19 pandemic but it has happened before the existence of this virus.
"The problem in banking today is credit crunch, not liquidity," he said in a virtual discussion, Monday, July 20.
Credit crunch is a situation when banks are reluctant to extend credit because there is no demand in the market. If banks are forced to continue channeling credit to corporations, there will be the potential for bad credit and liquidity problems to arise in 2021.
Furthermore, Chatib said that he had conducted a quantitative study on demand and investment in 2016. The results show that it is not investment that drives consumption. On the contrary, it is consumption that encourages investment.
According to Chatib, this has made entrepreneurs reluctant to add credit. This is because the Loan to Deposit Ratio (LDR) or the ratio of loans to deposits has decreased.
"Why do I ask for credit, I don't need expansion," he explained.
Not only that, Chatib assessed that liquidity injection into banks is currently not effective enough to boost the economy. Moreover, demand for credit is still sluggish.
"So efforts to boost the banking sector by providing liquidity may not be very effective," he said.
In addition, Chatib reminded the government and banks to be careful in 2021 because of the credit restructuring policy during the COVID-19 pandemic.
According to Chatib, restructuring makes debtors get relief in credit payments and debtors with collectability status of 1 and collectability 2 are considered current. However, whether the debtor is running smoothly or not will really be seen after the restructuring policy is over.
"Until the OJK ends the relaxation, at that time we know whether there is real bad credit or not. So that's where the liquidity, NPL, profitability issues will exist. We have to get ready in 2021," he said.
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