OJK Warns Lenders of Potential for Increase in Bad Loans
Jakarta. The Financial Services Authority, or OJK, has warned lenders to mitigate default risks, as weak economic growth starts pressuring customers’ ability to pay and drives up delinquency on loan payments.
Loans in the special mention category, or those that miss payment for up to 90 days, rose 28 percent to Rp 194 trillion ($15 billion) in February from the same month last year, OJK data showed. The amount of bad loans, which are not paid for more than 270 days — stands pat, the data showed.
The OJK categorizes its nonperforming loans into special mention, sub standard (up to 180 days), doubtful (up to 270 days) and bad loans.
“We always meet the lenders telling them to anticipate that,” said Irwan Lubis, OJK’s deputy commissioner for banking supervision, said on Monday.
“Banks has to analyze which sectors whose [default] risk is increasing,” Irwan said. Still, he noted that the country’s lenders have adequate funds to cover for bad loans.
Indonesia’s economy may have expanded by less than 5 percent in the first quarter this year, its slowest pace in more than five years as weak commodity prices pressures companies’ profitability and households’ income, as the governments slacks in spending.
The post OJK Warns Lenders of Potential for Increase in Bad Loans appeared first on The Jakarta Globe.
Source: The Jakarta Globe