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Not a problem of liquidity, banks face credit crunch, what is that?

ILLUSTRATION. JAKARTA, 30/11 – LAUNCHING NEW INVESTMENT MANAGER. President Director of PT Majorist Asset Management (MAM), Zulfa Hendri (right), gave a souvenir to former Minister of Finance Muhammad Chatib Basri on the sidelines of the launch of PT MAM’s new investment manager at

Reporter: Titis Nurdiana | Editor: Titis Nurdiana

KONTAN.CO.ID -JAKARTA. Minister of Finance for the 2013-2014 period Chatib Basri sees that the banking problems that occur today are not liquidity problems. This appears from loan to deposite ratio aka credit ratio versus loose third party funds.

According to him, the government’s efforts to encourage the banking sector by providing ineffective liquidity. “The bank’s problem is not liquidity, but credit crunch, “Chatib said in an online discussion on Monday (7/20).

Credit crunch is the reluctance of banks to extend credit because there is no demand. As a result, poor demand will make the placement of government funds in banks to increase liquidity ineffective.

If the government continues to force banks to boost credit, potential problems will occur next year. Namely the rise in problem loans. Especially if the corona pandemic is still threatening.

A similar phenomenon occurred during the 1997/1998 economic crisis. At that time, global trade was collapsing or collapse, banks were reluctant to extend credit for export-related activities.

According to him, the problem of liquidity and bank non-performing loans will only emerge next year. Ie, when the stimulus for interest relief and installments is complete. “This will only appear in the next year, bank loans in real terms,” ​​he said.

Credit restructuring program by providing relief to make credit status in the bank’s books smoothly. However, whether or not the debtor will actually be seen when the restructuring policy is over.

Chatib asked the government and banks to be careful in 2021 because there was a policy of credit restructuring during the Covid-19 pandemic. “Until the FSA ends relaxation, at that time we know whether there is a real bad loan or not. Then that’s where liquidity, NPL, profitability will be there. We have to get ready in 2021,” he said.

One solution during the 1998 crisis was that multilateral development agencies chose to provide funds of up to US $ 250 billion as collateral for loans (credit guarantee) to banks.

Chatib sees that the current government policy is still on track, namely by providing guarantees through Asrindo and Jamkrindo, namely by providing interest subsidies as collateral as well as additional capital for BUMN credit guarantors.

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