In September 2013, the central bank issued a regulation requiring a 25 percent advance payment for motorcycles and 30 percent for non commercial four wheel motor vehicles.The advance payment is 20 percent for the purchase of commercial four wheel motor vehicles.
The central bank issued the regulation to prevent an increase on non performing credits (NPL) amid the economic slowdown.
Bank Indonesia Governor Agus Martowardojo said for the sake of prudential aspect financing companies are not advised to finance motor vehicle purchases without down payment.
"There is always down payment in financing," Agus said here on Wednesday night.
Agus said he had not been informed of the plan directly by OJK, adding he planned to seek a meeting with OJK to discuss the plan.
Bank Indonesias Executive Director for Macro Economy and Monetary Affairs Juda Agung said the policy scrapping down payment regulation could result in a rebound in automotive market.
"But , it is necessary to consider the risk of a rise in NPL, which is potential to undermine the healthiness of the financing companies. We must be careful in maintaining balance between financial stability and growth," he said.
Last week, OJK announced plan to scrap the regulation requiring advanced payment for the purchases of motor vehicles with credit.
However, only those - corporate or individual clients - having good track record, are entitled to the facility and not all financing companies are allowed to give the facility, an OJK executive Firdaus Djaelani said.
Only financing companies having low NPL of less than 1 percent in three consecutive months are allowed to give the facility, Firdaus added.
He said the policy is to help recover automotive market, which has been hit by slump as a result of the advance payment restriction amid falling purchasing power of the people.
"We want to lift the automotive industry from the deep slump, but indirectly we also want to boost financing industry," he said.
He said OJK would announce a regulation to provide a legal basis for the decision this month.
He said OJK would likely start authorizing only 10-15 of 270 financing companies to give the facility of offering financing without down payment.(*)
Editor: Heru Purwanto
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