Indonesia relaxes credit guarantee rules to boost loan growth
JAKARTA, April 5 (Reuters) – Indonesia has relaxed its rules for granting government guarantees for corporate bank loans, in a bid to boost credit growth and avoid further layoffs, the ministry said on Monday. finances.
Southeast Asia’s largest economy fell into recession last year for the first time since 1998. Authorities have said they are focusing on tackling a credit crunch to spur a recovery after a slump. series of monetary easing and fiscal stimulus.
The new rules will allow businesses that employ at least 100 people, or as few as 50 employees in some industries, to apply for a government guarantee for new working capital loans at commercial banks, the ministry said in a statement.
The previous program, launched last July, had a threshold of 300 people.
The easing also includes granting guarantees for loans of up to three years, compared to the old regime supporting loans of up to one year, and halving the minimum amount. loans of 5 billion rupees ($ 345,000).
Only companies affected by the pandemic can apply, the ministry said.
Loans from commercial banks in Indonesia have declined despite abundant liquidity financial markets and the banking regulator easing loan restructuring rules.
Bankers have blamed weak demand, while authorities say the banks themselves have been slow to pass the monetary easing on to customers, seeking instead to protect their own margins.
The central bank cut interest rates by a total of 150 basis points and pumped more than $ 50 billion into the financial system, while tax authorities gave tax breaks to keep businesses afloat.
However, outstanding commercial bank credit contracted 2.15% on an annual basis at the end of February, the Bank of Indonesia said.
“We hope that with the relaxation of this program, we can help maintain the financial conditions of companies and stimulate the real sector, while also having an impact on other aspects, such as the minimization of layoffs related to the pandemic, ”the finance ministry said. ($ 1 = 14,510.0000 rupees) (Reporting by Gayatri Suroyo; Editing by Hugh Lawson)