Along with the growth of third-party funds, banking credit expanded to 5.24 percent year on year, he informed.
"This is the impact of the accommodative policy from fiscal and monetary so that it provides space for banks to have sufficient liquidity to increase credit going forward," Santoso said during a hearing meeting of Commission XI of the House of Representatives, accessed in Jakarta on Thursday.
Banking capital is also still high, which can be seen from the Capital Adequacy Ratio (CAR) of 25.67 percent in December 2021, he pointed out.
"This is strong enough to anticipate the default risk from debtors. And this CAR has been maintained above 20 percent since before the pandemic," he said.
Loose banking liquidity can also be seen from the indicators of liquid assets for non-core deposits (AL/NDC) and third-party funds (DPK), which are at the level of 36.36 percent and 164.29 percent, respectively, or are above the minimum threshold of 10 percent and 50 percent, he informed.
Santoso said that the OJK will continue to ensure bank credit risk does not increase due to any potential increase in COVID-19 cases in 2022.
Related news: OJK records banking credit growth of 0.5% in July
The risk of bank credit in 2021 can be maintained, which can be seen from the decrease in the ratio of non-performing loans (NPL) in December 2021 to 3 percent from 3.19 percent the previous month, he added.
"NPLs in all major sectors experienced a decline, where the largest decline occurring in the mining sector, from 5.04 percent to 4.42 percent," Santoso informed.
President Joko Widodo (Jokowi) had earlier said that the policy and supervision instruments of the OJK should prevent widespread economic and financial impacts of the COVID-19 pandemic, he said.
He further asked that the tools of the OJK for supervising and policing be used to help micro, small, and medium enterprises (MSMEs) and other informal sectors to not only survive but also grow in the pandemic.
"(The OJK) needs to have a specific strategy that is more detailed, effective, and careful though (it must) not disrupt the (government's) efforts for recovery. Hence, the policies and supervisions issued by the OJK need to stop the pervasive impact of the COVID-19 pandemic," the President remarked.
He deemed it necessary to have a more specific strategy in place for handling or mitigating the wide-ranging impacts of the pandemic, as some sectors have suffered lingering issues.
Related news: MSME loan growth exceeds total credit: BI
Translator: Sanya D, Azis Kurmala
Editor: Suharto
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