ASEAN KEY DESTINATIONS
BNI to convert Rp 2t risky loans in slow economy
State-owned lender Bank Negara Indonesia (BNI) is restructuring some of its riskier loans in an effort to improve its non-performing loan (NPL) ratio amid the ongoing economic pressure, an executive has said.
BNI business banking II director Sutanto said the bank was prepared to restructure the “risky” loans anytime after the Financial Services Authority (OJK) issued a temporary measure on Friday.
The temporary measure provides leniency for banks to restructure loans that have a high risk of becoming non-performing due to the negative impact of the weak economy and rupiah depreciation.
“There is a pressure on our NPL ratio. So, the OJK’s temporary relaxation will help rescue some customers who have problems with loan repayments, but still have the potential strength to survive,” Sutanto said after an event on Friday.
Based on its calculation, Sutanto said BNI had found that the current outstanding loans that would soon be restructured amounted to at least Rp 2 trillion (US$141.3 million).
The figure includes Rp 1.7 trillion categorized as collectibility level two or “special mention” and the remaining Rp 300 billion as level five or “loss”.
There are five loan-quality classifications at the moment, with the best quality set under collectability one (pass), followed by collectability two (special mention), collectability three (substandard), collectability four (doubtful) and collectability five (loss).
Based on their sectors, Sutanto said a major part of the outstanding loans that would be restructured came from trading as well as some companies supporting the mining and oil industries.
Food caterers for mining companies are also included on the list.
Sutanto said BNI would restructure its loans based on the OJK’s measure, which allows lenders to recondition their loan agreements with some institutional customers that have somewhat disrupted cash flows.
The recondition of loan agreements can be made by changing a number of clauses in the contracts, such as special payment schemes, lending term extensions as well as the negotiation of interest rates, according to Sutanto.
“We have set up a special team to handle this restructuring program and we are convinced that the OJK’s temporary measure will help with the progress,” Sutanto said.
Sutanto said that NPLs among smaller borrowers, such as micro-businesses and small and medium enterprises (SMEs), were improving to around 2 to 2.5 percent as they were deemed resilient enough and had better prospects.
With those segments showing positive prospects, Sutanto said BNI was eager to maintain its lending to micro-businesses and SMEs through linkage programs, including for rural banks (BPR), whose total outstanding loans reached Rp 43.2 trillion as of June.
The total outstanding micro and SME loans also included government-subsidized micro-loans (KUR), which amounted to Rp 30 billion from the first launch on Aug. 14 until now.
“Micro loans contribute Rp 5 trillion to BNI’s total micro and SME loans and are expected to reach Rp 8 trillion by the end of the year,” Sutanto said.
To achieve the target, BNI signed on Monday a loan linkage agreement worth Rp 268.7 billion with Sentra Modal Harmoni, a holding company for dozens of rural banks. The loan will be passed through to customers of the company’s subsidiary, the BPR Nusamba Group, which has already disbursed Rp 1 trillion in outstanding loans.
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