Jakarta (Antara Bali) - Bank Indonesia has lowered its target for bank credit expansion to 10-12 percent from 11-13 percent set originally for this year.
Credit demand and supply has remained low since early this year, Deputy Governor of the central bank Perry Warjiyo said here on Friday.
Credit grew only 8 percent in April down from 8.7 percent in March this year, he cited.
The central bank, therefore, needs to encourage demand for and supply of credits, he added.
In a bid to boost demand, the central bank has reduced advance payment for housing credit (KPR) by raising the housing loan to value (LTV) ratio to 85 percent, he said.
With the increase in the LTV ratio, the advance payment for house purchase is lower to 15 percent of the house price.
"This is expected to push up demand for KPR ," he said.
Meanwhile, in a bid to encourage banks to be more aggressive in credit expansion, the central bank has raised the Loan to Loan to Funding Ratio (LFR) to 80 percent from 78 percent earlier. The credit ceiling is maintained at 92 percent.
Banks, there are are required to have an LFR of at least 80 percent, he said.
LFR reflects the level of bank's success in intermediacy in mobilizing the public funds or in conversing third party funds into credit.
"Banks, however, need time to adjust their steps to the two relaxation measures in the macro prudential policy. Therefore, the result is not expected to come at once," Perry said.
He said the possibility to reduce of the advance payment of 20 percent for motor vehicles credits is still being studied by the central bank.
Perry indicated, however, the 20 percent advance payment for motor vehicle credits would be maintained, describing it as reasonable. (WDY)
