Government Concerned about Non-Performing Loans
Friday, 08 December, 2006 | 14:37 WIB

TEMPO Interactive, Jakarta: The government is concerned with non-performing credit of some state-owned banks.

Finance Minister Sri Mulyani Indrawati said that non-performing loans (NPL) have often hindered a bank's performance in disbursing loans to people.

She explained that now banks are an extremely vital institution in the economic structure. The reason is that other instruments such as the stock exchange has not yet become a top choice to channel funds. “It is really worrying if banks must face non-performing loan so that they cannot function,” she said.

Compared to private banks, state-owned banks are more restricted in repaying their non-performing loans. According to the Secretary General of the Department of Finance Mulia P. Nasution. non-performing loans in state-owned banks must be paid off through the Committee of State Debt and Credit.

Private banks have clearer completion of credit. According to Mulia, non-performing loans at private banks could be paid through the corporate mechanism. Non-performing loans at state-owned and regional banks, Mulia added, have now reached the distress level.

From the data from Deputy Managing Auditor of the Supreme Audit Agency, Widodo Mumpuni, the rate of non-performing loans at state-owned banks until September 2006 was 15.4 percent, whereas public banks stood at 7.9 percent.

Agoeng Wijaya/Yuliawati