Increased Bank Lending and Further Rate Cuts to Support Indonesia’s Economic Rebound: Bank Indonesia

Indonesia’s commercial banks are being urged to lower their lending rates and increase credit disbursements whilst better managing responses towards risk, according to Bank Indonesia (BI).

Data from BI revealed that bank lending declined 0.47% year-on-year (YoY) in October 2020, shrinking for the first time in at least twenty years. This was largely attributed to the banks’ unwillingness to lend and customers were being reluctant to obtain loans as business activities start to cool down.

So far for 2020, BI has lowered its benchmark interest rate by 125 basis points, to a record low of 3.75% in its efforts to boost Indonesia’s economic recovery. However, BI data showed that...