Jakarta (Antara Bali) - The Indonesian central bank (Bank Indonesia) has issued a new regulation regarding the amount of loan-to-value (LTV) consumers can receive for a housing loan and for advances for motor vehicle credit.
Dody Budi Waluyo, the central bank's Director of Strategic Planning and Public Relations, said on Friday that the regulation was issued to increase the bank's prudence in granting house and motor vehicle loans and to strengthen the financial sector's resilience.
The provision is contained in the Circular of Bank Indonesia No.14/10/DPNP, dated March 15, 2012, on the Risk Management Application on Banks that provide Home Ownership Loans and Motor Vehicle Credit.
Waluyo said that the LTV ratio measures the value of credits that can be provided by the bank against the value of the collateral at the time of finalizing the initial loan and sets a maximum of 70 percent for the loan.
The scope of mortgage loans may include the acquisition of residential property, including flats or apartments but not including home offices and home stores for buildings that extend beyond 70 square meters. LTV has so far excluded housing loans for compliance with the government's housing program.(IGT/T007)
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