FILE PHOTO: People walk out of a building inside the Bank Indonesia complex in Jakarta, Indonesia December 16, 2015. REUTERS/Darren Whiteside/File PhotoJAKARTA : Indonesia's financial regulator is studying a government proposal to reinstate a COVID-era loan restructuring incentive, one of its commissioners said, as some bankers cautioned about the potential moral hazard created by relaxing prudential rules.
Widodo's proposal, which is planned to last until 2025, came even as data shows a significant decline in restructured loans in recent years, and as the ratio of gross non-performing loans for banking sector is around 2 per cent. Some bankers said reinstating the policy could create a moral hazard by reducing the impact on a bank if a risky loan soured, and noted non-performing loans were relatively low."It's full of moral hazard risk, because there is no specific request from the industry for the relaxation," banker Taswin Zakaria said, adding that lending is currently growing which suggested liquidity was not a pressing issue.