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OJK Asks Banks to Issue Free Down Payment Rules for Property and Cars

BI said the property and automotive sectors contributed to economic growth

REPUBLIKA.CO.ID, SOLO – The Financial Services Authority (OJK) asks banks to issue regulations related to Down Payment (DP) policies or zero percent down payments for car and property loans.

“The regulator has issued regulations, there is a PBI (Bank Indonesia Regulation), POJK (OJK Regulation), from the industry there is a Decree from their internal Directors, what kind of mechanism is there,” said Head of OJK Surakarta Eko Yunianto in Solo, Thursday. (11/3).

He said regarding the zero percent down payment policy, OJK has been in talks with banks since some time ago. Even the OJK together with BI have also held discussions with associations, including Real Estate Indonesia (REI). According to him, one thing to watch out for in relation to the policy is risk weighting, namely risk-weighted assets.

“The smaller the down payment, which is 0 to 30 percent, the greater the risk weight, reaching 35 percent, so the down payment of 30 to 50 percent of the risk weight decreases to 25 percent. Meanwhile, the down payment is more than 50 percent of what is financed, the risk weight will decrease to 20 percent , “he said.

Asked about the impact on banking liquidity, according to him, currently a lot of money is stored in banks. “Currently, credit growth is minimal, growth in deposits (third party funds) is high. Many funds are stored and have not been distributed,” he said.

Previously, the Head of Representative of Bank Indonesia (BI) Surakarta Nugroho Joko Prastowo said on the one hand the easing policy allowed the public to apply for motor vehicle and property loans with a zero percent down payment. On the other hand, he said, the automotive and property sectors had a high contribution to economic growth.

He said that currently people, especially the middle to upper class, keep more of their money in the bank. Data from BI shows that in 2020 DPK grew by 11.11 percent, while credit contracted by 2.41 percent. He said one of the impacts of middle-upper class people saving their money was a decrease in motor vehicle sales throughout 2020.

Nugroho Joko said that under normal conditions the Association of Indonesian Automotive Industries (GAIKINDO) could sell around 1.1 million units a year. Of the total sales figure, around 700 thousand of them are to meet the domestic market.

However, during the COVID-19 pandemic, sales have decreased quite significantly. Therefore, it is hoped that the zero percent down payment policy for motorized and property loans can encourage people to spend their money.

source: Between

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