Banks warned against being over aggressive in credit expansion

Pontianak, W Kalimantan (ANTARA News) - A Bank Indonesia executive has cautioned bankers to keep from being too aggressive in credit expansion.

Deputy Director of macro prudential policy department of the central bank Ita Rulina said banks should continue to observe the prudential banking principles despite rising trend of the economic growth and purchasing power of the people.

"The purpose of being cautious in credit expansion is to minimize systemic risks that could disrupt the countrys financial stability," Ita said here on Saturday.

Bank liquidity needs to be maintained against the possibility of price fall of certain commodities on which a region depends much for export earning, she said.

The prices could plunge any time under the prevailing and unpredictable global condition, she said.

Producers and exporters are not the only ones to suffer losses, but creditor banks also would suffer if the prices fall, she said.

She said the macro-prudential policy of the Central Bank would mitigate systemic risk. (*)