Bank Indonesia says no threat of overheating

Bank Indonesia has observed the trend in credits in the consumption sector, therefore, we issued the regulation."
Jakarta (ANTARA News) - Bank Indonesia said the 28 percent growth in bank credits in the first half of the year would not cause economic overheating.

The credit expansion exceeded the target of 24 percent on the average set in the country`s Bank Business Plans for the January-June period this year.

Bank Indonesia already predicted the surge in credit prompting the decision to increase the down payment for the purchases of consumer goods, Darmin Nasution, the central bank governor said on Tuesday.

The central bank and the finance ministry have issued a regulation requiring an increase in the down payment for motorcycles, cars and houses.

The down payment for motorcycles and cars was raised from 10 percent to 25 percent of the price.

The policy is to prevent an increase in non performing loans amid the threat of global financial crisis.

"Bank Indonesia has observed the trend in credits in the consumption sector , therefore, we issued the regulation," Darmin said.

He said credit for the property and automotive sectors are the most potential to cause economic overheating , adding credits for the manufacturing sector has less risk of overheating. (ASG/YH)