Economic recovery will not be optimal if it only relies on state budget funds and Bank Indonesia funds. Hence, the disbursement of credit funds should be encouragedJakarta (ANTARA) - Economist at Padjadjaran University Aldrin Herwany gauged that credit disbursement by banks to business actors would become the key to recovery and acceleration of Indonesia's economic growth in 2021.
"Economic recovery will not be optimal if it only relies on state budget funds and Bank Indonesia funds. Hence, the disbursement of credit funds should be encouraged," Herwany noted at an online seminar in Jakarta on Monday.
The economist remarked that interest rates had currently plunged, and the demand for credit was high, though the supply of credit was still very low.
Herwany clarified that the low credit supply was not owing to the banks reeling from a paucity of money, but because they still perceived a high risk while extending credit to business actors.
"I surveyed a few months ago when there was a pandemic in April. The debtors were good and smooth, but they are now experiencing trouble with working capital loans. When they applied for credit, what happened to our banks? Our bankers politely refused," he pointed out.
Herwany admitted to have conducted a survey of 50-70 middle- to upper-class debtors that were existing bank customers categorized as not having defaulted in paying their credit installments, but their application for working capital loans was rejected by the bank.
According to the economist, several business actors, particularly corporations, currently require working capital loans to maintain operational sustainability in order to avoid layoffs.
Banks offer heavier and unusual credit terms like in the conditions before the COVID-19 pandemic, so in the end, the debtor regularly withdraws and ultimately, the credit does not grow.
Herwany noted that this condition was owing to the different perceptions pertaining to the risks and the current economic conditions between the government, Bank Indonesia, and banks.
The economist highlighted the importance of all stakeholders, including the government, Bank Indonesia, the Financial Services Authority (OJK), Deposit Insurance Corporation (LPS), and banks coming together often to discuss and equate perceptions through focus group discussions (FGD) or other meetings.
"It is expected that in 2021, regulators and players, especially in the banking industry, would sit together. Hopefully, credit expansion would run," Aldrin added.
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